Suvarnyug Sahakari Bank Ltd., Pune V. ACIT, Pune

ITA 1668/PUN/2012

• Counselvise Citation: 166824514 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEB JAIN
• Keywords: Depreciation; Business expenditure; Cost of acquisition; Bad and doubtful debts; Revenue expenditure
• Section: 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1668/PN/2012 A.Y. 2008-09 SUVARNYUG SAHKARI BANK LTD., 1102/10/11, MARNE HEIGHTS, BUDHWAR PETH, PUNE 411 002 PAN AACAS4805L APPELLANT VS. ACIT, CIRCLE 6, PUNE RESPONDENT APPELLANT BY : SHRI VIJAY D. KENDHE RESPONDENT BY : SHRI RAJ EEB JAIN DATE OF HEARING : 04.10.2013 DATE OF ORDER : 29.10.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-III PUNE DATED 20-01-2012 FOR A.Y. 20 08-09 ON THE FOLLOWING GROUNDS. 1. THE LEARNED COMMISSIONER OF INCOME TAX APPEAL (APPE AL III) PUNE HAS ERRED IN LAW AS WELL AS IN FACTS WHIL E CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICE R MAKING ADDITION OF RS.14,50,000/- BEING BAD DEBTS WHICH THE BANK HAS LOST DUE TO VARIOUS AMOUNTS NOT RECOVERABLE BY THE BRANCHES SINCE THE LOSS OF SUCH A NATURE IS A REVENUE LOSS OF THE BANK AND ALLOWABLE AS DEDUCTION U/S. 36/37 OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX APPEAL (APPE AL III) PUNE HAS ERRED IN LAW AS WELL AS IN FACTS WHIL E CONFIRMING THE ADDITION OF RS.36,62,956/- BEING THE AMORTIZATION OF PREMIUM PAID ON PURCHASE OF GOVT. SECURITIES SINCE THE AMOUNT IS OF THE NATURE OF REV ENUE EXPENDITURE EXPENSED OUT PERTAINING TO THE RELEVANT PREVIOUS YEAR AND HENCE ALLOWABLE AS BUSINESS EXPENDITURE U/S.36/37 OF THE INCOME TAX ACT. 2. THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN BANKING ACTIVITIES, HAVING DULY REGISTERED UNDER THE MAHARA SHTRA STATE CO-OPERATIVE SOCIETIES ACT, 1960 AND BANKING REGULA TION ACT, 1949. THE RETURN OF INCOME FOR ASSESSMENT YEAR UND ER APPEAL WAS FILED ON 30.09.2008 DECLARING TOTAL INCOME AT RS.4,55,50,220/-. IN ASSESSMENT ORDER PASSED U/S. 143(3), THE ASSESSING OFFICER HAS ASSESSED THE TOTAL INCOME AT RS.5,10,68,176/- BY MAKING VARIOUS DISALLOWANCES / ADDITIONS. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY. 3. FIRST ISSUE IN THE APPEAL IS REGARDING DISALLOWA NCE OF RS.14,50,000/- DEBITED TO PROFIT & LOSS ACCOUNT ON ACCOUNT OF PROVISION FOR INTER BRANCH AND INTER BANK ADJUSTMEN T. AS PER COMPLIANCE REPORT SUBMITTED BY THE ASSESSEE TO THE RBI, THE PROVISION WAS MADE FOR PENDING ENTRIES FOR MORE THA N TWO YEARS. THIS PROVISION WAS MADE ON 31.03.2008 PENDING RECON CILIATION OF INTER BRANCH AND INTER BANK ACCOUNTS. AS PER ADVIS E OF RBI, THE ASSESSEE DID NOT TAKEN INTO ACCOUNT THE SAID ENTRIE S AS INCOME EITHER IN CURRENT YEAR OR IN PRECEDING YEAR. THE S TAND OF THE ASSESSEE HAS BEEN THAT IT HAS BEEN CARRYING ON BANK ING BUSINESS WHEREIN CASH IS WORKING CAPITAL OF THE BANK AND AMO UNT OF ADVANCE HAVING BEEN PAID OUT OF THE WORKING CAPITAL , LOSS OF WORKING CAPITAL IS OF REVENUE NATURE AND ALLOWABLE U/S. 37 OF THE I.T. ACT AS ANY OTHER EXPENDITURE IN RELATION TO TH E BUSINESS. THE CIT(A) HAS OBSERVED THAT PROVISION IS AN EXPENDITUR E RELATING TO PARTICULAR ACCOUNTING PERIOD, BUT NOT FALLING DUE O N DATE OF FINANCIAL STATEMENT. SINCE THE EXPENDITURE RELATE TO PARTICULAR FINANCIAL PERIOD, A PROVISION WAS MADE AGAINST REVE NUE GENERATED IN SAID ACCOUNTING PERIOD, FAILING WHICH FINANCIAL STATEMENT COULD NOT BE SAID TO BE SHOWN FREE AND FA IR VIEW. A PROVISION FOR EXPENDITURE COULD BE ALLOWED AS DEDUC TION ONLY IF LIABILITY ACCRUED AS ON DATE OF MAKING OF PROVISION AND IT IS NOT A CONTINGENT LIABILITY. EVEN MERCANTILE LAW ACCRUAL SYSTEM OF ACCOUNT, A PROVISION FOR EXPENDITURE COULD BE MADE ONLY WHEN LIABILITY HAS ACCRUED AND NOT BEFORE ACCRUAL OF THE LIABILITY. 3.1 IN THE PRESENT CASE PENDING RECONCILIATION OF S AID INTER BRANCH AND INTER-BANK ENTRIES, ASSESSEE HAS MADE A PROVISION AS ON 31.03.2008 FOR OUTSTANDING UNTRACEABLE INTER BRA NCH AND INTER-BANK ADJUSTMENT. WHEN THE RECONCILIATION OF THE ENTRY WAS PENDING AS ON 31.03.2008, PROVISION SO MADE FOR ADD ITION FOR VALUE, IF ANY, IN RESPECT OF INTER BRANCH ENTRIES C LAIMED TO BE PENDING FOR MORE THAN TWO YEARS, WAS PRE-MATURED. IT IS ONLY CONTINGENT LIABILITY OR NOTIONAL LOSS WHICH COULD N OT BE ALLOWED AS EXPENDITURE UNDER THE PROVISIONS OF INCOME TAX A CT. 3.2 THE OTHER CONTENTION RAISED ON BEHALF OF LEARNE D AUTHORIZED REPRESENTATIVE FOR ASSESSEE WAS THAT PROVISION WAS MADE AFTER RBI INSPECTION OF BANK AND AS PER ADVISE OF RBI. T HE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD., VS. JCIT 320 ITR 577, HAS HELD THAT RBI GUIDELINES HAVE NOTHING TO DO WITH THE COMPUTATION OF TAXABLE INCOME UNDER INC OME TAX ACT. PRUDENTIAL NORMS WERE PRESCRIBED BY RBI AND I N PURSUANCE OF WHICH PROVISION WAS STATED TO HAPPENED TO, CANNO T REGULATE INCOME TAX RULES AND ADMISSIBILITY OF SUCH PROVISIO N FOR BAD DEBT OR LOSS TO BE EXAMINED UNDER PROVISIONS OF INC OME TAX ACT. UNDER THE TAX PROVISIONS, DIMINUTION IN VALUE, IF A NY, COULD BE CLAIMED ONLY AT THE TIME OF PENDING ENTRIES BUT IN PRESENT CASE PROVISION WAS MADE BY ASSESSEE ON A MERE PRESUMPTIO N THAT THERE WAS REMOTE POSSIBILITY OF RECEIVING AMOUNT BA CK WHEN DURING PENDENCY OF RECONCILIATION OF THE SAID ENTRI ES. IT SHOWS THAT AMOUNT IN QUESTION WAS NOT ACTUALLY RETURN AS BAD DEBT OR BUSINESS LOSS DURING THE YEAR AND IT WAS ONLY NOTIO NAL PROVISION OR LOSS FOR DIMINUTION OF THE VALUE IF ANY, WHICH C OULD NOT BE ALLOWED AS DEDUCTION EITHER U/S. 37 OF THE I.T. ACT OR U/S. 28 OF THE I.T. ACT. 3.3 IN APPEAL CIT(A) HELD THAT THE ASSESSING OFFICE R WAS JUSTIFIED IN DISALLOWING THE PROVISION MADE FOR INT ER BRANCH AND INTER BANK ADJUSTMENT, ACCORDINGLY, ADDITION OF RS. 14,50,000/- MADE BY THE ASSESSING OFFICER ON THIS GROUND WAS UP HELD BY THE CIT(A) AND THE SAME IS OPPOSED BEFORE US. 3.4 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE ARE NOT INCLINED TO INTERFERE IN THE FIN DING OF CIT(A). AS PER COMPLIANCE REPORT SUBMITTED BY ASSESSEE TO R ESERVE BANK OF INDIA, PROVISION WAS MADE FOR PENDING ENTRY FOR MORE THAN TWO YEARS. THIS PROVISION WAS MADE ON 31-03-2008 PENDI NG RECONCILIATION OF INTER BRANCH AND INTER BANK ACCOU NTS. AS PER ADVISE OF RESERVE BANK OF INDIA, THE ASSESSEE DID N OT TAKE INTO ACCOUNT THE SAID ENTRY AS INCOME EITHER IN CURRENT YEAR OR IN PRECEDING YEAR. REVENUE AUTHORITIES OBSERVED THAT PROVISION IS AN EXPENDITURE RELATING TO A PARTICULAR ACCOUNT PER IOD BUT NOT FALLING DUE ON DATE OF FILING FINANCIAL STATEMENT. SINCE THE EXPENDITURE RELATES TO PARTICULAR FINANCIAL YEAR, A PROVISION WAS MADE AGAINST REVENUE GENERATED IN SAID ACCOUNTING P ERIOD FAILING WHICH FINANCIAL STATEMENT COULD NOT BE SHOWN FREE A ND FAIR VIEW. THE PROVISION FOR EXPENDITURE COULD BE ALLOWED AS D EDUCTION ONLY IF LIABILITY ACCRUED AS ON DATE OF MAKING PROVISION AND IT IS NOT A CONTINGENT LIABILITY. IN CASE BEFORE US PENDING RE CONCILIATION OF SAID INTER BRANCH AND INTER BANK ENTRIES, ASSESSEE HAS MADE A PROVISION AS ON 31-03-2008 FOR OUTSTANDING UNTRACEA BLE INTER BRANCH AND INTER BANK ADJUSTMENTS. IN THIS SITUATI ON PROVISION SO MADE WAS PRE-MATURED. IT WAS ONLY CONTINGENT LI ABILITY OR NOTIONAL LOSS WHICH COULD NOT BE ALLOWED AS AN EXPE NDITURE UNDER PROVISIONS OF I.T ACT. THE AMOUNT IN QUESTIO N WAS NOT ACTUALLY RETURNED AS BAD OR BUSINESS LOSS DURING TH E YEAR AND IT WAS ONLY NOTIONAL PROVISION OR LOSS FOR DIMINUTION OF VALUE, IF ANY WHICH COULD NOT BE ALLOWED AS DEDUCTION EITHER U/S. 37 OF I.T ACT OR U/S. 28 OF I.T ACT WHICH HAS BEEN RIGHTLY DISALL OWED BY ASSESSING OFFICER. ACCORDINGLY, THE ORDER OF CIT(A ) ON THE ISSUE IS UPHELD. 4. THE SECOND ISSUE IS WITH REGARDS TO ADDITION OF RS.36,62,956/- BEING AMORTIZATION OF PREMIUM PAID O N PURCHASE OF GOVERNMENT SECURITIES. THE ASSESSEE CLAIMED DED UCTION OF RS.38,62,956/- ON ACCOUNT OF AMORTIZATION OF PREMIU M PAID ON ACQUISITION OF HELD TO MATURITY (HEREINAFTER CALLED HTM SECURITIES). WHEN ASSESSEE BANK INVESTED IN GOVERN MENT SECURITIES UNDER HTM, PREMIUM PAID OVER AND ABOVE T HE FACE VALUE IS AMORTIZED BY BANK OVER THE PERIOD REMAININ G TO MATURITY. THE CLAIM OF ASSESSEE IS THAT AMORTIZATI ON OF PREMIUM WAS CLAIMED AS PER RBI GUIDELINES, THEREFORE, THE S AME NEED TO BE ALLOWED WHILE COMPUTING THE INCOME OF THE ASSESS EE. THE AO DID NOT ALLOW THE SAME AND IT WAS CONFIRMED BY THE CIT(A). 4.1 BEFORE US IT WAS POINTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF ITAT IN ITA NO.1 413/PN/2011 ORDER DATED 08-08-2013 IN CASE OF ACIT VS. PUNE PEO PLES COOPERATIVE BANK WHEREIN FOLLOWING RATIO IN CASE OF ACIT VS. ALIBAG COOPERATIVE URBAN BANK LTD. VIDE ITA NO.2173 /PN/2012 ORDER DATED 23-09-2013 SIMILAR ISSUE HAS BEEN DECI DED IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFI CER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF TH E ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND AN IDENTICAL ISSUE HAD CO ME UP BEFORE THE TRIBUNAL IN THE CASE OF NASHIK MERCHANT COOPERATIVE BANK LTD. (SUPRA). WE FIND THE TRIBUNA L HAS DISCUSSED THE ISSUE AND DISMISSED THE GROUNDS RAISE D BY THE REVENUE BY HOLDING AS UNDER : 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATE RIAL ON RECORD WE FIND THAT WITH THE ADVENT OF SECTION 80P(4) W.E. F. A.Y, 2007-08 HAS CLOSED THE DOORS FOR COOPERATIVE BANKS FOR CLAIMING THE BENEFIT OF DEDUCTION U/S.80P(2)(A)(I) FROM THIS TOTAL INCOME. HOWEVER, THE COOPERATIVE SOCIETY SHOULD NOW BE ENTITLED TO BE AS SESSED AS NORMAL BANKING COMPANY. THE CLAUSE (4) INSERTED IN SECTION 80 P HAS TAKEN AWAY THE BENEFIT OF THE ERSTWHILE DEDUCTION AVAILABLE TO COOPERATIVE SOCIETY IN CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITY TO ITS MEMBERS. THE NEW CLAUSE (4) INSERTED BY THE FINANCE ACT, 2006 W.E.F. 01-04-2007 READS AS UNDER : ' THE PROVISION OF THE SECTION WAS NOT IN RELATION TO ANY COOPERATIVE BANK OTHER THAN AGRICULTURAL CREDIT SOCIETY OR PRIM ARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK'. 5. THE INTENTION OF THE PROVISION MAY BE DERIVED M ORE PRECISELY FROM RELEVANT PARA 166 OF THE BUDGET SPEECH WHICH STATED THA T : 'CO-OPERATIVE BANKS, LIKE ANY OTHER BANK, ARE LENDING INSTI TUTIONS AND SHOULD PAY TAX ON THEIR PROFITS, PRIMARY AGRICU LTURAL CREDIT SOCIETIES (PACS) AND PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK (PCARDB) STAND ON A SPECIAL FOOTING AND WILL CONTINUE TO BE EXEMPT UNDER SECTION 80P OF THE INCOME TAX ACT. HOWEVER, I PROPOSE TO EXCLUDE ALL OTHER CO-OPERATIVE BANKS FROM THE SCOPE OF THAT SECTION'. ACCORDINGLY, SECTION 80P IS TO BE AMENDED TO GIVE EFFECT TO THE ABOVE PROPOSAL. IT IS ALSO PR OPOSED TO AMEND SECTION 2(24) TO PROVIDE THAT PROFITS AND GAINS OF BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON B Y A CO- OPERATIVE SOCIETY WITH ITS MEMBERS SHALL BE INCLUDE D IN THE DEFINITION OF 'INCOME' (WITH EFFECT FROM 1ST APRIL, 2007)'. 6. COOPERATIVE BANK UNLIKE OTHER COMMERCIAL BANKS ARE SUBJECTED TO DUAL CONTROL FROM BOTH RBI AS WELL AS FROM STA TE COOPERATIVE DEPARTMENT. THE ACCOUNTING TREATMENT FO R A COOPERATIVE BANK IS THEREFORE A RESULT OF GUIDELINES FROM BOTH THE CONTROLLING AUTHORITIES. ORDINARILY A DEDUCTION IS NOT AVAILABLE TO AN ASSE SSEE UNLESS SPECIFICALLY PROVIDED UNDER THE ACT. THIS IS IRRESPECTIVE O F ACCOUNTING TREATMENT PROVIDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. BUT AT THE SAME TIME IT WAS WELL SETTLED THAT DEDUCTION EXPRESSLY MENTIONED UNDER THE ACT ARE NOT EXHAUSTIVE AND PR OFIT IS TO BE DERIVED ACCORDING TO ORDINARY COMMERCIAL PRIN CIPLES. AS PER THE EXTANT RBI GUIDELINES DATED 01-07-2009 THE INVE STMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER 3 CATEGORIES VIZ., HELD THE MATURITY HTM), HELD FOR TRADING (HFT) AND AVAILABLE F OR SALE (AFS). THE VALUE OF EACH KIND OF INVESTMENT IS TO BE DONE IN THE FOLLOWING MANNER: SR.NO. CLASSIFICATION VALUATION NORMS OF INVESTMENT . 1. HTM THESE ARE CARRIED AT ACQUISITION COST UNLESS THE COST IS MORE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM SH OULD BE AMORTISED OVER THE PERIOD REMAINING TO MATURITY. THE PREM IUM IS REQUIRED TO BE AMORTISED OVER THE PERIOD REMAINING TO MATURITY. THIS APART, ANY PERMANENT DIMINUTION IN VALUE SHALL FV SH ALL GO ON TO REDUCE COST OF THE INVESTMENT. 2. AFS THE INDIVIDUAL SCRIPS IN THE AVAILABLE FOR SALE CATEGOR Y WILL BE MARKED TO MARKET AT QUARTERLY OR AT MORE FREQUENT I NTERVALS. THESE INVESTMENTS ARE CONSIDERED TO FORM STOCK-IN-TRADE OF A BANK AND THEREFORE ARE TO BE VALUED AT COST OR NRV, WHICHEVER IS LES S. FALL IN VALUE BELOW COST, THEREFORE, IS TO BE PROVI DED IMMEDIATELY, HOWEVER ANY NET APPRECIATION IN VALUE IS IGNORED AN D NOT RECOGNIZED AS INCOME ON THE BASIS OF CONSERVATISM. 3. HFT THE INDIVIDUAL SCRIPS IN THE HELD FOR TRAD ING CATEGORY WILL BE MARKED TO MARKET AT MONTHLY OR AT MORE FREQUENT INTERV ALS AND PROVIDED FOR AS IN THE CASE OF THOSE IN THE AVAILABLE FOR SALE CATEGORY. 7. IN PARA (VII) OF THE CBDT INSTRUCTION NO.17 OF 2008 DATED 26.11.2008, ON 'ASSESSMENT OF BANK - CHECK LIST FOR DEDUCTION, STATES AS UNDER: 'AS PER RBI GUIDELINES DATED I6TH 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 AVAILABLE FOR SALE (AFS). INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE CARRIED AT ACQUISITION COST UNLESS THESE ARE MORE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM SHOULD BE AMORTISED OVER THE PERIOD REMAINING TO MATURITY. IN THE CASE OF HFT AND AFS SECURITIES FORMING 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 PROVIDED FOR IN THE ACCOUNTS. THE LATEST GUIDELINES OF THE RB I MAY BE REFERRED TO FOR ALLOWING ANY SUCH CLAIMS.' 8. THE ITAT, MUMBAI BENCH, IN THE CASE OF ACIT VS. THE BANK OF RAJASTHAN LTD. (2011) TIOL-35-ITAT-MUMBAI, HAS HELD THAT IN CASE OF BANKS, THE PREMIUM PAID IN EXCESS OF FACE VALUE OF INVESTM ENTS CLASSIFIED UNDER HTM CATEGORY WHICH HAS BEEN AMORTISED OVER THE PERI OD TILL MATURITY IS ALLOWABLE AS REVENUE EXPENDITURE SINCE THE CLAIM IS AS PER RBI GUIDELINES AND CBDT ALSO HAS DIRECTED TO ALLOW SUCH PREMIUM. IT HAS ALSO BEEN HELD IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. ACIT THAT AMORTIZATION ON PURCHASE OF GOVERNMENT SECURITIES W AS MADE AS PER PRUDENTIAL NORMS OF THE RBI AND SAME WAS ALLOWABLE DEDUCTION. IN VIEW OF ABOVE, ASSESSEE WAS JUSTIFIED IN CONTENDING FOR AMORTIZATION OF PREMIUM PAID IN EXCESS OF FACE VALUE OF SECURITIES HELD TO MATURITY (HTM) CATEGORY OR PERIOD REMAINING TILL MATURITY WA S FOUND REASONABLE BY THE CIT(A). ACCORDINGLY ADDITION OF RS.17,91,65 9/- MADE BY THE ASSESSING OFFICER BY DISALLOWING AMOUNT TOWARDS AMO RTIZATION OF GOVERNMENT SECURITIES (HMT) WAS DELETED. THIS REAS ONED FACTUAL AND LEGAL FINDING OF THE CIT(A) NEEDS NO INTERFERENCE F ROM OUR SIDE. WE UPHOLD THE SAME. 9. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL AND IN ABSENCE OF ANY CONTRAR Y MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ABOVE CI TED DECISION WE FIND NO INFIRMITY IN THE ORDER OF THE L D.CIT(A) DELETING THE ADDITION. ACCORDINGLY, THE ORDER OF T HE LD.CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE R EVENUE ARE DISMISSED. 4.2 NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE. F ACTS BEING SIMILAR. SO FOLLOWING THE REASONING IN THE ABOVE D ECISIONS CITED (SUPRA) WE HOLD THAT AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.36,62,956/- BEING AMORTIZATION OF PREMIUM PAID O N PURCHASE OF GOVERNMENT SECURITIES. SINCE THE AMOUNT IS OF N ATURE OF REVENUE EXPENDITURE EXPENDED OUT PERTAINING TO RELE VANT PREVIOUS YEAR, HENCE, ALLOWABLE AS BUSINESS EXPENDI TURE U/S.36(VII) OF THE INCOME TAX ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF OCTOBER 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH OCTOBER 2013 GCVSR/SATISH COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT-III PUNE 4) THE CIT(A)-III PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE