Bankura District Central Co - Operatative Bank Limited., Bankura V. A.C.I.T. Cir - Bankura, Bankura

ITA 111/KOL/2013

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9777 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: PRATAP KANTI GHOSH
• Keywords: Depreciation; Audit objection; Revenue expenditure
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 111/KOL/201 3 ASSESSMENT YEAR : 2007-0 8 BANKURA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. -VS- ACT, CIRCLE-BANKURA [PAN: AABAB 6253 G ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI PRATAP KANTI GHOSH, FCA FOR THE RESPONDENT : SHRI SAURABH KUMAR, ADDL . CIT SR. DR DATE OF HEARING : 26.11.2018 DATE OF PRONOUNCEMENT : 12.12.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-DURGAPUR, [IN SHORT THE LD CIT( A)] IN APPEAL NO. 73/CIT(A)/DGP/2011-12 DATED 05.09.2012 AGAINST THE ORDER PASSED BY THE ACIT, CIRCLE-BANKURA [ IN SHORT THE LD AO] UNDER SECTIO N 154 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 01.12.2010 FOR THE ASS ESSMENT YEAR 2007-08. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF AMORTIZ ATION OF PREMIUM PAID AT THE TIME OF PURCHASE OF INVESTMENTS CLASSIFIED UNDER HELD TO MA TURITY (HTM) IN THE SUM OF RS. 45,29,325/-, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.111/KOL/2013 BANKURA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. A.YR. 2007-08 2 3. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSMENT FOR ASSESSMENT YEAR 2007-08 WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF T HE ASSESSEE AT RS. 4,38,35,760/-. LATER PURSUANT TO THE REVENUE AUDIT OBJECTION, THE LD. AO OBSERVED THAT THE ASSESSEE HAD CLAIMED EXCESS DEPRECIATION OF RS. 45,29,325/-REPRE SENTING EXCESS CLAIM MADE ON ACCOUNT OF AMORTIZATION OF PREMIUM PAID FOR SECURIT IES HELD UNDER HTM CATEGORY. ACCORDINGLY, HE DISALLOWED THE EXCESS DEPRECEIATION OF RS. 45,29,325/- VIDE ORDER U/S 154 OF THE ACT DATED 01.12.2010. 4. THE ASSESSEE PLEADED THAT IT HAD CHARGED AMORTIZ ATION CHARGES OF PREMIUM PAID ON PURCHASE OF GOVERNMENT SECURITIES HELD UNDER HTM CA TEGORY UNDER THE HEAD DEPRECIATION. THIS AMORTIZATION WAS DONE AS PER T HE RESERVE BANK OF INDIA GUIDELINES DATED 16.10.2000. IT WAS ALSO ARGUED THAT THE SAID AMORTIZATION OF PREMIUM IS ALLOWABLE AS A REVENUE EXPENDITURE BY PLACING RELIANCE ON CER TAIN DECISIONS. THE LD. CIT(A) HOWEVER DID NOT HEED TO THESE CONTENTIONS OF THE AS SESSEE AND UPHELD THE ACTION OF THE LD. AO. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PAPER BOOK SUBMITTED BY THE ASSESSEE SHOWING DETAILED CALCULATION OF AMORTIZATION OF PREMIUM PAID ON PURCHASE OF GOVERNM ENT SECURITIES HELD UNDER HTM CATEGORY. THESE DETAILS ARE ENCLOSED IN PAGE 12 OF THE PAPER BOOK. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD CLAIMED THE AMORTIZATION OF G OVERNMENT SECURITIES HELD UNDER HTM CATEGORY AS DEDUCTION / ALLOWANCE BY INCLUDING THE SAME UNDER THE HEAD DEPRECIATION ON FIXED ASSETS. WE FIND THAT THE CENT RAL BOARD OF DIRECT TAXES HAD ISSUED INSTRUCTION NO. 17/ 2008 DATED 26.11.2008 ON THE SU BJECT MENTIONED ISSUE WHEREIN IT HAS BEEN CATEGORICALLY MENTIONED THAT THE INVESTMENTS H ELD UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE TO BE CARRIED AT ACQUIS ITION COST UNLESS THESE ARE MORE THAN FACE VALUE, IN WHICH CASE THE PREMIUM SHOULD BE AMO RTIZED OVER THE PERIOD REMAINING TO 3 ITA NO.111/KOL/2013 BANKURA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. A.YR. 2007-08 3 MATURITY. WE FIND THAT THE ACTION OF THE ASSESSEE I N THE INSTANT CASE IS IN CONSONANCE WITH THE RBI INVESTMENT VALUATION GUIDELINES DATED 16.10.2000 AND CBDT INSTRUCTION NO. 17/ 2008 DATED 26.11.2008. HENCE THERE CANNOT B E ANY INFIRMITY IN THE ACTION OF THE ASSESSEE IN THE FACTS OF THE INSTANT CASE. ACCORDIN GLY, WE DIRECT THE LD. AO TO DELETE THE DISALLOWANCE OF RS. 45,29,325/- WHILE GIVING EFFECT TO THIS APPELLATE ORDER. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 12 .12.2 018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12.12.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE CHIEF EXECUTIVE OFFICER, BANKURA DISTRICT CE NTRAL CO-OPERATIVE BANK LTD., HEAD OFFICE, MACHANTALA, P.O.-BANKURA, DIST.-BANKURA, PI N-722101. 2. ACIT, CIRCLE-BANKURA, BILASH BHAWAN, CHANDMARIDA NGA, P.O.-BANKURA, DIST. BANKURA, PIN-722101 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES