The ACIT,Patan Circle, Patan V. The Chanasma Nagrik Sahkari Bank Ltd., Patan

ITA 1054/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8633 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Capital asset; Depreciation; Business expenditure; Cost of acquisition; Commercial expediency
• Section: 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.1054/AHD/2013 2. ./ I.T.A. NO.1334/AHD/2014 ( / ASSESSMENT YEARS : 2009-10 & 2010-11) 1. THE ACIT PATAN CIRCLE PATAN 2. THE CHANASMA NAGRIK SAHAKARI BANK LTD., PATAN / VS. 1. THE CHANASMA NAGRIK SAHAKARI BANK LTD. KACHERI ROAD CHANASMA, PATAN 384 265 2. THE ACIT, PATAN CIRCLE,PATAN # ./ ./ PAN/GIR NO. : AAAAT 2981 L ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) REVENUE BY : SHRI K.MADHUSUDAN, SR.DR A SSESSEE BY : SHRI S.N. DIVATIA, AR '()* / DATE OF HEARING 22/08/2017 +,-.)* / DATE OF PRONOUNCEMENT 04/09/2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS BY THE REVENUE AND ASSESSE E ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR [CIT(A) IN SHORT] DATED 23/01/2013 AND ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 2 - DATED 13/01/2014 ARISING IN THE MATTER OF ASSESSMEN T ORDERS DATED 28/12/2011 AND 13/02/2013 PASSED FOR THE ASSESSMENT YEARS (AYS) 2009-10 & 2010-11 RESPECTIVELY. 2. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OF TOGETHER BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1054/AHD/2013 - AY 2009-10 - REVENUES APPEAL: 3. THE REVENUE HAS CHALLENGED THE RELIEF GRANTED BY THE CIT(A) IN THE MATTER WHERE LOSS OF RS.76,44,970/- DECLARED BY THE ASSESSEE AS BUSINESS LOSS WAS TREATED BY THE ASSESSING OFFICE R (AO) AS CAPITAL LOSS. 4. THE ASSESSEE IS A CO-OPERATIVE BANK REGISTERED U NDER GUJARAT CO- OPERATIVE SOCIETY ACT AND IS STATED TO BE CARRYING ON BANKING BUSINESS UNDER THE SUPERVISION AND CONTROL OF RESERVE BANK O F INDIA. THE RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASS ESSMENT. IN THE COURSE OF THE SCRUTINY ASSESSMENT, THE AO FOUND THAT THE A SSESSEE, A CO- OPERATIVE BANK HAS INCURRED LOSS OF RS.76,44,970/- (RS.66,70,790/- ON SALE OF SECURITIES AND RS.9,74,180/- ON SALE OF BON DS) ON SALE OF SECURITIES WHICH WAS CLAIMED AS BUSINESS LOSS IN TE RMS OF SECTION 6(1)(A) OF THE BANKING REGULATION ACT. THE AO TREATED THE AFORESAID LOSS AS LONG TERM CAPITAL LOSS (LTCL) ON THE GROUND THAT TH E ASSESSEE-BANK ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 3 - HAS SHOWN THE PURCHASE OF SECURITIES UNDER THE HEAD INVESTMENT IN THE BALANCE SHEET. 5. IN THE FIRST APPEAL, THE CIT(A) GRANTED RELIEF T O THE ASSESSEE AND TREATED THE LOSS ARISING OF SECURITIES AS BUSINESS LOSS AS PER THE CLAIM OF THE ASSESSEE. THE RELEVANT PARA OF THE ORDER OF TH E CIT(A) READS AS UNDER:- 7. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE RETURNS OF THE APPELLANT FOR THE ASSESSMENT YEAR UNDER APPEAL AND ACCOUNTS FOR THREE EARLIER YEARS, THE ASSESSMENT ORDER THE SUBMISSIONS OF THE APPELLANT AND THE RE MAND REPORT. BEFORE GOING INTO THE LEGAL ASPECT AND DECIDING THE CASE, I WOULD LIKE TO INNUMERATE THE IMPORTANT FACTS AND THE ACCOUNTING METHOD AND HOW THE ASSESSEE HAD BEEN DISCLOSING THE INCOME. THESE ARE: I. THE ASSESSEE'S ALL SECURITIES ARE BEING HELD AS AFS (AVAILABLE FOR SALE) AND HTM (HELD TO MATURITY). NO SECURITIES ARE BEING HELD AS HELD FOR TRADING' I.E., HFT II. NONE OF THE HTM (HELD TO MATURITY) SECURITIES HELD HAVE BEEN SOLD DURING THE YEAR. THE PREMIUM HAS BEEN AMORTIZED AND CHARGED TO P&L ACCOUNT AND CLAIMED AS EXPENSE WITH RESPECT TO THESE. III. ONLY SECURITIES CLASSIFIED AS 'AFS (AVAILABL E FOR SALE) HAD BEEN SOLD AND TRADED DURING THE YEAR. THESE WERE ALREADY BEING HELD AS A FS AND NO CHANGE IN CLASSIFICATION TOOK PLACE. IV. ALTHOUGH THE APPELLANT HAD BEEN DEBITING THE PR OVISION OF DEPRECIATION IN THE VALUE OF AFS(AVAILABLE FOR SALE) ASSETS AS ON THE C LOSING DATE TO THE P&L A/C WHILE WORKING ITS BOOKS PROFITS; HOWEVER, IT WAS WRITING THEM BACK FROM YEAR TO YEAR WHILE COMPUTING THE TOTAL INCOME FOR THE PURPOSE OF INCOM E-TAX. V. IN THE REMAND PROCEEDINGS AS REPORTED BY THE A O THAT SOME OF THE SECURITIES WERE (SUBSEQUENTLY CONVERTED INTO HTM. NO CASE OF RE VERSE TRANSFER HAS BEEN POINTED ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 4 - OUT. THEREFORE, AS FAR AS THE INCOME-TAX RETUR NS AND COMPUTATION OF INCOME ARE CONCERNED; THE APPELLANT, HAS NOT CLAIMED ANY D IMINUTION IN VALUE OF ASSETS HELD IN THE AFS (AVAILABLE FOR SALE) CATEGORY SECURITIE S, AS FAR AS THE INCOME- TAX RETURNS AND COMPUTATION OF INCOME ARE CONCERNED . THESE HAVE BEEN VALUED AT COST IN EFFECT , FROM YEAR TO YEAR. 7.1 AFTER CONSIDERING THE ABOVE FACTS, I HAVE CAREF ULLY CONSIDERED THE REASONING OF THE AO JUSTIFYING THE DISALLOWANCE MADE BY HIM AND THE SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD AND THE FACTS OF THE CASE INCLUDING THE ACCOUNTING IN EARLIER YEARS. THE FOLLOWING MATERIAL OBSERVATIONS ARE MADE ON THE ISSUE: 1) AS PER SECTION 6 READ WITH SECTION 5(B) AND (C) BANKING REGULATION ACT AND AS PER THE GUIDELINE ISSUED BY THE RESERVE BAN K OF INDIA, INVESTMENT ACTIVITIES IS THE NORMAL BANKING ACTIVITY AND SHOUL D BE TREATED AS BANKING STOCK IN TRADE. THE FORMAT OF THE BALANCE SHEET HAS BEEN PRESCRIBED BY THE LEGISLATURE AND BANK HAS TO REPORT THEIR FINANCIAL RESULT IN THAT FORMAT ONLY. AS PER THIS FORMAT THE INVESTMENT IN NON-SLR SECURITIE S THOUGH TREATED AS BANKING ASSETS (STOCK IN TRADE) HAS TO BE SHOWN IN THE BALANCE SHEET AS INVESTMENT. 2) THE ABOVE POSITION HAS ALSO BEEN CLARIFIED BY CI RCULAR NO. 665 OF THE CBDT DATED 05-10-1993. 'THE QUESTION WHETHER A PARTICULAR ITEM OF INVESTME NT IN SECURITIES CONSTITUTES STOCK-IN-TRADE OR A CAPITAL ASSET IS A QUESTION OF FACT IN FACT, THE BANKS ARE GENERALLY GOVERNED BY THE INSTRUCTIONS OF THE RESER VE BANK OF INDIA FROM TIME TO TIME WITH REGARD T:O THE CLASSIFICATION OF ASSET S AND ALSO THE ACCOUNTING STANDARDS FOR INVESTMENTS, THE BOARD HAS, THEREFORE , DECIDED THAT THE ASSESSING OFFICERS SHOULD DETERMINE ON THE FACTS AN D CIRCUMSTANCES OF EACH CASE AS TO WHETHER ANY PARTICULAR SECURITY CONSTITU TES STOCK-IN-TRADE OR INVESTMENT TAKING INTO ACCOUNT THE GUIDELINES ISSUE D BY THE RESERVE BANK OF INDIA IN THIS REGARD FROM TIME TO TIME. CBDT HAS FURTHER ISSUED INSTRUCTION FOR THE ASSESSM ENT OF BANKS VIDE ITS INSTRUCTION NO. 17/2008 DATED 26.11.2008 (F. NO. 22 8/3/3008 ITA- III). POINT NO. VII OF THE SAID INSTRUCTION- ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 5 - 'AS PER RBI GUIDELINES DATED 16TH OCTOBER 2000, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER THREE CATEGORIES VIZ. HELD TO MATURITY (HTM), HELD FOR TRADING (HFT) AND AVAILABL E FOR SALE (AFS). INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE CARRIED AT ACQUISITION COST UNLESS THESE ARE MO RE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM SHOULD BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY. IN THE CASE OF HFT AND AFS SECURITIES FORCING STOCK IN TRADE OF THE BANK, THE DEPRECIATION / APPRECIATION IS TO BE AGGREGATED SCRIP WISE AND ONLY NET DEPRECIATION, IF ANY, IS REQUIRED TO BE PR OVIDED FOR IN THE ACCOUNTS. THE LATEST GUIDELINES OF THE RBI MAY BE REFERRED TO FOR ALLOWING ANY SUCH CLAIMS,' IN SUCH CIRCUMSTANCES, WHERE THE SAME METHOD OF ACC OUNTING IS FOLLOWED AND ALLOWED FROM YEAR TO YEAR, SUCH CLAIM HAS BEEN HELD TO BE ALLOWABLE BY THE DIFFERENT COURTS. THE HON'BLE MUMBAI HIGH COURT IN THE EASE OF CIT VS BANK OF BARODA (2003) 262 ITR 334 HAS HELD THAT 'DEPRECI ATION IN VALUE OF INVESTMENT HELD BY BANK WAS ALLOWABLE AS DEDUCTION, MORE SO WHEN THE LOSS WAS DEBITED TO P&L A/C WHICH WAS REFLECTED AS PROVI SION FOR LIABILITY IN THE BALANCE SHEET AND THE SHARE AND SECURITIES WERE VAL UED AT COST ON THE ASSET SIDE. SAME PROPOSITION HAS BEEN UPHELD BY KERALA HIGH COU RT IN CASE OF CIT VS NEDUNGADI BANK LTD (2003) 130 TAXMAN 93 (KER), THEREFORE, EVEN THE DEPRECIATION IN VALUE IF HAD BE EN CLAIMED FROM YEAR TO YEAR, WAS ALLOWABLE. NOW THIS ALLOWANCE OF DEPRECIA TION, WHICH IS A PROVISION FOR LOSS ON THE BASIS OF MARKET VALUE; IS IN EFFECT THE APPLICATION OF WELL KNOWN AND WELL ACCEPTED PRINCIPLE OF VALUATION OF CLOSING STOCK AT COST OR MARKET PRICE WHICHEVER IS LOWER. THIS METHOD IN FACT ALLOWS FOR NOTIONAL LOSS. NOW, THIS ALLOWANCE OF DEPRECIATION HELD ALLO WABLE BY THE BOARD CIRCULAR AND THE DIFFERENT DECISIONS OF THE HIGH CO URTS, HAVE BEEN MADE AND COULD HAVE BEEN MADE ONLY ON THE BASIS OF THESE SEC URITIES BEING TREATED AS STOCK IN TRADE. THE ASSESSEE HAS BEEN FOLLOWING CON SISTENT METHOD OF IN EFFECT CLAIMING NO DEPRECIATION (WRITING BACK ANY PROVISIO N OF DEPRECIATION IN P&L ACCOUNT (IDR) FOR COMPUTATION OF TOTAL INCOME) AND THUS VALUING CLOSING STOCK AT COST ONLY FOR SHOWING THE INCOME IN ITS RE TURNS. IN NUT SHELL, AS DISCUSSED ABOVE, THE BANK HAS CLAIMED LOSS IN RESPE CT OF SECURITIES WHICH IT HAD ALWAYS MEANT TO HOLD AS TRADING ASSETS AND SHOW N AS AFS AS PER RBI'S ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 6 - GUIDELINES AND CLASSIFICATIONS. JUST BECAUSE THE BA NKS HAVE TO KEEP THEM FOR LONGER TIMES BECAUSE OF THE NATURE OF THEIR BUSINES S, IT WOULD NOT CHANGE THE NATURE OF THE ASSET. FURTHER, AS HELD BY HON'BLE MU MBAI HIGH COURT IN THE CASE OF GIT VS BANK OF BARODA (2003) 262 ITR 334; T HE MERE FACT THAT THE BANKS ARE REQUIRED AS PER RBI'S GUIDELINES TO SHOW I THESE IN THE BALANCE SHEET AS INVESTMENT WOULD NOT AFFECT THE NATURE OF THE ASSET. THE BANKS BY THE VERY NATURE OF THE BUSINESS MAY HAVE TO PARK SURPLU S TRADING FUNDS IN SECURITIES AND ALTHOUGH INTENDED TO BE TRADING ASSE TS MAY HAVE TO KEEP THEM FOR LONGER PERIODS IF FUNDS ARE NOT REQUIRED. THE T REATMENT OF SECURITIES OF AFS CATEGORIES HAS TO BE SEEN IN CONTRADICTION AND CONTRAST WITH SECURITIES OF HTM CATEGORY WHICH ARE PURCHASED AND HELD FOR THE P URPOSE OF INVESTMENT ONLY. THE CIRCULAR AND INSTRUCTION OF THE CBDT BEIN G SQUARELY APPLICABLE, LEAVES NO DOUBT ON THE ALLOWABILITY OF THE ASSESSE E'S CLAIM. THE GROUND OF APPEAL IS ALLOWED TO THE EXTENT THAT THE LOSS IS TO BE TAKEN AS BUSINESS LOSS. 6. THE LD.DR RELIED UPON THE ORDER OF THE AO. IN FURTHERANCE THE LD.DR SUBMITTED THAT WHEN THE ASSESSEE ITSELF HAS C LASSIFIED THE SECURITIES HELD BY IT UNDER THE HEAD INVESTMENT, THE PROFIT/ LOSS ARISING ON SALE OF SUCH SECURITIES HELD AS INVESTMENT HAVE BEEN RIGHTL Y TREATED TO BE OF CAPITAL NATURE BY THE AO. 7. THE LD.AR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). THE LD.AR SUBMITTED THAT THE ASSESSEE IS IN PECULIA R BUSINESS OF BANKING WHICH IS REGULATED BY THE RBI. THE RBI HAS PRESCRI BED A FORMAT WHEREBY THE SECURITIES HELD ARE DECLARED UNDER THE HEAD IN VESTMENT AND FURTHER ARE CLASSIFIED AS HELD TO MATURITY (HTM) HELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS) AS PER RESERVE BANK OF I NDIAS INSTRUCTION. THE LD.AR SUBMITTED THAT RBI MANDATORILY REQUIRES T HE BANKS TO CLASSIFY THE INVESTMENT IN GOVERNMENT SECURITIES AS NOTED AB OVE. IT WAS SUBMITTED ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 7 - THAT ASSESSEE-COMPANY BEING IN BANKING BUSINESS IS REQUIRED TO COMPULSORILY PREPARE ITS BALANCE-SHEET AS PER THE P ROVISIONS OF BANKING REGULATION ACT. A STANDARD BALANCE-SHEET FORMAT IS THUS PRESCRIBED WHEREIN THERE IS SPECIFIC HEAD INVESTMENT WHERE T HE AFORESAID SECURITIES GIVING RISE TO THE IMPUGNED LOSS WERE REFLECTED AS PER NORMS & PROCEDURE. THE NOTIFIED FORMAT DOES NOT PROVIDE FO R BIFURCATION BETWEEN THE SECURITIES SO HELD TOWARDS INVESTMENT OR STO CK IN-TRADE. IT WAS SUBMITTED THAT OWING TO LITIGATION OF THIS TYPE, T HE ISSUE STANDS CLARIFIED BY THE CBDT CIRCULAR NO.665 DATED 05/10/1993 AS REF ERRAL TO BY CIT(A). THEREFORE, IN VIEW OF THE PECULIAR FACTS SITUATION, NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE AUTHORITIES BELOW. IT IS THE CASE OF THE AS SESSEE THAT THE IMPUGNED LOSS AROSE ON SALE OF SECURITIES AND BONDS EMANATED FROM INVESTMENTS WHICH WERE SUB-CLASSIFIED UNDER AVAILABLE FOR SAL E (AFS) CATEGORY AT THE TIME OF PURCHASE. IN VIEW OF THE AFORESAID FAC TS, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE THAT THE LOSS ARISING ON SALE OF SECURITIES/BONDS ARE OF TRADING NATURE NOTWITHSTANDING THE FACT THAT THE SECURITIES WERE GROUPED UNDER THE HEAD INVESTMENT OWING TO THE P RESCRIBED FORMAT OF THE RBI. WE FIND THAT THE ORDER OF THE CIT(A) DEAL ING WITH THE ISSUE IS CONSISTENT WITH THE CBDT INSTRUCTION AS WELL AS THE FACTS OF THE CASE AND ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 8 - DOES NOT REQUIRE ANY ELABORATION. ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A). 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO.1334/AHD/2014 AY 2010-11 ASSESSEES APPE AL 10. IN THE CAPTIONED APPEAL, THE ASSESSEE HAS INTER-ALIA RAISED GRIEVANCE TOWARDS DISALLOWANCE OF RS.4,35,821/- INC URRED BY THE WAY OF CONSTRUCTION OF STATUE OF SHRI SARDAR PATEL AT A CI RCLE IN THE TOWN WHERE THE ASSESSEE IS SITUATED. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO NOTICED THAT THE ASSESSEE HAS INTER-ALIA CLAIMED RS.4,35,821/- AS URBAN DEVELOPMENT EXPENSES WHICH WERE INCURRED TOWARDS STATUE OF SHR I SARDAR PATEL TO BE INSTALLED ON THE CIRCLE IN THE TOWN. IT IS THE CAS E OF THE ASSESSEE THAT THE SAID EXPENDITURE WAS INCURRED TOWARDS LARGER CORPOR ATE RESPONSIBILITY TOWARDS THE RESIDENTS OF TOWN WHERE THE ASSESSEE-BA NK IS SITUATED. THE AO CONCLUDED THAT THE SAID EXPENSES CANNOT BE SAID TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSIN ESS AND THEREFORE IS NOT A PERMISSIBLE BUSINESS EXPENDITURE. ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 9 - 12. THE CIT(A) CONFIRMED THE DISALLOWANCE MAINLY O N THE GROUND THAT DEVELOPING A CIRCLE IN THE TOWN BY INSTALLING A STA TUE WAS NOWHERE RELATED TO THE BUSINESS OF BANKING. THE CIT(A) ACCORDINGLY DECLINED ANY RELIEF. 13. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE THE TRIBUNAL. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THE ISSUE. WE FIND OURSELVES IN AGREEMENT WITH THE CONTENTION RAISED O N BEHALF OF THE ASSESSEE THAT THE EXPENSES INCURRED ARE REVENUE IN NATURE AND NO ENDURING BENEFIT CAN BE STATED TO BE DERIVED BY THE ASSESSE E. WE TAKE NOTICE OF THE PLEA THAT THE PROPERTY IN STATUE ALSO DID NOT VEST IN THE ASSESSEE-BANK. SIMILARLY, WE OBSERVE THAT THE EXPENSES CAN BE SAID TO HAVE BEEN INCURRED FOR THE PURPOSES OF BUSINESS FOR THE SIMPLE REASON THAT SUCH INCURRING OF EXPENSES ADDS TO THE VISIBILITY OF THE ASSESSEE-BAN K AMONGST ITS STAKEHOLDERS. THE EXPENDITURE THUS INCURRED CAN BE RATIONALLY SAID TO HAVE BEEN INCURRED FOR THE PROMOTION OF THE ASSESSE ES ONGOING BUSINESS AND THUS AN ALLOWABLE BUSINESS EXPENDITURE. SUCH I NCURRING OF EXPENDITURE WOULD PRESUMABLY ENHANCE THE BRAND IMAG E OF THE ASSESSEE. THE EXPENDITURE INCURRED IS THUS FOR BUSINESS PURPO SES WHEN NOT ALLEGED FOR ANY EXTRANEOUS CONSIDERATION. IT IS ANOTHER MA TTER TO QUESTION THE EXPEDIENCY OF SUCH EXPENDITURE WHICH IN ANY CASE IS NOT FOR THE REVENUE LOOK INTO. IT IS TRITE THAT FOR THE PURPOSE OF BU SINESS CONTEMPLATED UNDER S.37 IS WIDER IN SCOPE THAN THE EXPRESSION F OR THE PURPOSE OF ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 10 - EARNING PROFITS AND MAY COMPREHEND MANY ACTS INCID ENTAL TO THE CARRY ON OF A BUSINESS. THUS, SO LONG AS THE EXPENDITURE HAS BEEN INCURRED ON THE GROUNDS OF COMMERCIAL EXPEDIENCY AND IN ORDER T O DIRECTLY OR INDIRECTLY FACILITATE THE CARRY OF THE BUSINESS, TH E FACT THAT THERE WAS NO COMPELLING NECESSITY TO INCUR THE EXPENDITURE ON WH ICH DEDUCTION IS CLAIMED IS AN IRRELEVANT CONSIDERATION. THE EXPEND ITURE IN THE INSTANT CASE HAS GONE IRRETRIEVABLY IN THE COURSE OF CARRYI NG ON OF BUSINESS. THE EXPENSES INCURRED HAS POTENTIAL TO INCREASE THE VIS IBILITY OF THE ASSESSEE IN THE PUBLIC AT LARGE AND THUS HAS BEARING ON BUSINES S ACCELERATION. THEREFORE, WE FIND CONSIDERABLE MERIT IN THE CLAIM OF THE ASSESSEE. CONSEQUENTLY, CLAIM OF THE ASSESSEE TOWARDS URBAN D EVELOPMENT EXPENDITURE OF RS.4,35,821/- DESERVES TO BE ALLOWED . 15. AS REGARDS CLAIM OF AMORTIZATION OF SECURITIES PREMIUM AMOUNTING TO RS.1,91,690/-, WE NOTICE THAT THE AFORESAID AMOU NT REPRESENTS THE EXCESS OF ACQUISITION COST OVER THE FACE VALUE OF G OVERNMENT SECURITIES TAKEN UNDER HTM CATEGORY. WE FIND THAT THE ISSUE I S SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJKOT DIST. CO-OP BAN K LTD. IN TAX APPEAL NO.56 OF 2013 DATED 10/02/2014. THE HONBLE GUJARA T HIGH COURT PLACED RELIANCE UPON THE CBDT CIRCULAR NO.17 OF 200 8 AND HELD THAT LOSS ON ACCOUNT OF PREMIUM PAID ON THE FACE VALUE OF TH E SECURITY IS REQUIRED TO BE AMORTIZED FOR THE REMAINING PERIOD OF MATURIT Y. ITA NO.1054/AHD/2013 (BY REVENUE) & ITA NO.1334/AHD/2014 (BY ASSESSEE) ACIT VS. THE CHANASMA NAGRIK SAHAKARI BANK LTD. ASST.YEARS 2009-10 & 2010-11 - 11 - 16. IN VIEW OF THE BINDING JUDICIAL FIAT, THE CLAI M OF THE ASSESSEE TOWARDS AMORTIZATION OF SECURITY PREMIUM REQUIRES T O BE ACCEPTED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. 18. IN THE COMBINED RESULT, REVENUES APPEAL IN I TA NO.1054/AHD/2013 FOR AY 2009-10 IS DISMISSED AND ASSESSEES APPEAL I N ITA NO.1334/AHD/2014 FOR AY 2010-11 IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 04 / 0 9 /201 7 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 04/ 09 /2017 2..',.'../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 345* 6* / CONCERNED CIT 4. 6* ( ) / THE CIT(A)-GANDHINAGAR, AHMEDABAD 5. 789*'45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 9;( / GUARD FILE. / BY ORDER, &7** //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD