ACIT, Gulbarga V. M/s Krishna Grameena Bank, Gulbarga

ITA 592/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0436 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR CITIIIDR
• Keywords: Opportunity of being heard; Bad and doubtful debts
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.592/BANG/2014 ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, GULBARGA. VS. M/S. KRISHNA GRAMEENA BANK, HEAD OFFICE, KUSNOOR ROAD, GULBARGA. PAN: AAGFK 6964K APPELLANT RESPONDENT APPELLANT BY : SHRI SANJAY KUMAR, CIT-III(DR) RESPONDENT BY : SHRI G. VENKATESH, ADVOCATE DATE OF HEARING : 01.04.2016 DATE OF PRONOUNCEMENT : 06.05.2016 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT (APPEALS), HUBLI DATED 26.2.2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE REVENUE HAS FILED THE REVISED GROUNDS OF AP PEAL AND AS PER THE SAME, GROUND NOS. 1 & 7 ARE GENERAL. GROUND NO.2 I S AS UNDER:- 2. THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW T HE ACTUARIAL VALUATION OF PRIVILEGE LEAVE ENCASHMENT W ITHOUT CONSIDERING THE FACT THAT THE HON'BLE APEX COURT ST AYED ITA NO.592/BANG/2014 PAGE 2 OF 12 THE OPERATION OF THE JUDGMENT OF CALCUTTA HIGH COUR T IN THE CASE OF EXIDE INDUSTRIES LTD VS UOI, 292 ITR 470. 3. IT WAS SUBMITTED BY THE LD. DR OF REVENUE THAT G ROUND NOS. 1 & 7 ARE GENERAL. REGARDING GROUND NO.2, HE SUBMITTED T HAT THE LD. CIT(APPEALS) HAS FOLLOWED THE JUDGMENT OF HONBLE C ALCUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. V. UOI, 292 ITR 470 BUT THIS JUDGMENT HAS BEEN STAYED BY THE HONBLE APEX COURT AS PER JUDGMENT DATED 8.9.2008. HE SUBMITTED A COPY OF THE SAME AN D URGED THAT UNDER THESE FACTS, THE LD. CIT (APPEALS) WAS NOT JUSTIFIE D IN FOLLOWING THIS JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. V. UOI (SUPRA) . HE ALSO PLACED RELIANCE ON THE DECISION OF THE T RIBUNAL RENDERED IN THE CASE OF DLF HOME DEVELOPERS LTD. V. ACIT IN ITA NO.2559/DEL/2013 DATED 31.10.2013 (COPY FURNISHED) AND SUBMITTED THAT AS PER THIS TRIBUNALS ORDER ALSO, THE JUDGMENT OF HON BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. V. UOI (SUPRA) CANNOT BE FOLLOWED, AS PER WHICH IT WAS HELD THAT AMENDMENT T O SECTION 43B BY WAY OF INSERTION OF CLAUSE (F) IS UNCONSTITUTIONAL. IT WAS SUBMITTED THAT UNDER THESE FACTS, CLAUSE (F) OF SECTION 43B HAS TO BE AP PLIED IN THE PRESENT CASE AND AS A CONSEQUENCE, DEDUCTION IS NOT AVAILABLE ON ACCOUNT OF LEAVE ENCASHMENT PROVISION BECAUSE THE SAME WAS NOT PAID IN THE PRESENT YEAR. ITA NO.592/BANG/2014 PAGE 3 OF 12 4. AS AGAINST THIS, THE LD. AR OF ASSESSEE SUPPORTE D THE ORDER OF LD. CIT (APPEALS). HE ALSO PLACED RELIANCE ON THE FOLLOWIN G ORDERS OF THE TRIBUNAL AND SUBMITTED A COPY OF ALL THESE ORDERS:- (I) ACIT V. KRISHNA GRAMEENA BANK (ASSESSEE) IN IT A NO.1046/BANG/2013 DATED 3.12.2014 FOR AY 2009-10. (II) M/S. KRISHNA GRAMEENA BANK (ASSESSEE) V. ADDL. CIT IN ITA NO.146/BANG/2011 DATED 15.6.2012 FOR AY 2007-08. (III) NARAYANA HRUDAYALAYA P. LTD. V. ADDL. CIT IN IA NO.1281/BANG/2014 DATED 7.8.15 FOR AY 2010-11. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE DISALLOWANCE WAS MADE BY THE AO BY INVOKING THE PRO VISIONS OF CLAUSE (F) OF SECTION 43B AND THE SAME WAS DELETED BY THE LD. CIT (APPEALS) BY FOLLOWING THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. V. UOI (SUPRA) WHEREIN IT WAS HELD THAT INSERTION OF CLAUSE (F) IN SECTION 43B IS UNCONSTIT UTIONAL. SUBSEQUENTLY, THE HONBLE APEX COURT HAS STAYED THE OPERATION OF THIS JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. V. UOI (SUPRA) AND THEREFORE, THE ORDER OF THE LD. CIT (APPEALS) BY FOLLOWING THIS JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT CA NNOT BE APPROVED. THE LEGAL POSITION THAT NOW STANDS IS THAT CLAUSE (F) O F SECTION 43B IS VERY MUCH ON THE STATUTE BOOK AND THEREFORE, IF THE ASSESSEE HAS NOT MADE PAYMENT OF LEAVE ENCASHMENT PROVISION IN THE PRESENT YEAR, DEDUCTION ON ACCOUNT OF THAT PROVISION CANNOT BE ALLOWED AS PER PROVISIONS OF CLAUSE (F) OF SECTION ITA NO.592/BANG/2014 PAGE 4 OF 12 43B. IT IS NOT THE CASE OF ASSESSEE THAT PAYMENT W AS MADE FOR PROVISION OF LEAVE ENCASHMENT. REGARDING VARIOUS TRIBUNALS ORD ERS CITED BY THE LD. AR OF ASSESSEE, THESE WERE RENDERED IN ASSESSEES OWN CASE FOR AYS 2007-08 AND 2009-10 AND IN THE CASE OF NARAYANA HRUDAYALAYA P. LTD. (SUPRA) . THESE DECISIONS ARE NOT ON THE BASIS THAT IN SPITE OF PROVISIONS OF CLAUSE (F) OF SECTION 43B BEING ON THE STATUTE BOOK, DEDUCTION ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT HAS TO BE ALLOWED. THEREFORE, THESE TRIBUNALS ORDERS CANNOT BE FOLLOWED IN VIEW OF THE JUDGMENT O F THE HONBLE APEX COURT AS PER WHICH, THE JUDGMENT OF THE HONBLE CAL CUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. V. UOI (SUPRA) WAS STAYED. THEREFORE, CONSIDERING THE PROVISIONS OF CLAUSE (F) OF SECTION 43B, ON THIS ISSUE, WE REVERSE THE ORDER OF LD. CIT (APPEALS) AN D RESTORE THAT OF THE AO. GROUND NO.2 OF THE REVENUES APPEAL IS ALLOWED. 6. GROUND NO.3 IS AS UNDER:- 3. THE LEARNED CIT (A) ERRED IN ALLOWING THE ASSESS EE'S CLAIM TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS WITHOU T APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT FUR NISHED COMPLETE DETAILS TOWARDS ITS CLAIM AND THE LEARNED CIT (A) ERRED IN RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF M/S. CATHOLIC SYRIAN BANK LTD VS CIT, 343 ITR 270 WITHOU T APPRECIATING THE FACT THAT THE SAID DECISION WAS RE NDERED IN CONTEXT TO SECTION 36(1) (VII). 7. IT WAS SUBMITTED BY THE LD. DR OF REVENUE THAT T HE DETAILS AVAILABLE ON PAGES 1 TO 7 OF THE PAPERBOOK WERE NOT AVAILABLE BEFORE THE AO AND THEY WERE SUBMITTED FOR THE FIRST TIME BEFORE THE C IT (APPEALS) AND NO ITA NO.592/BANG/2014 PAGE 5 OF 12 REMAND REPORT HAS BEEN OBTAINED BY THE CIT (APPEALS ) FROM THE AO. HE ALSO SUBMITTED THAT AS PER PAGES 5 & 6 OF THE ASSES SMENT ORDER, IT WAS STATED BY THE AO THAT THE DETAILS REQUIRED AS PER R ULE 6ABA WERE NOT FURNISHED BEFORE HIM. THE LD. DR OF REVENUE SUBMIT TED THAT EVEN IF DETAILS SUBMITTED BEFORE THE CIT(APPEALS) WHICH ARE AVAILAB LE ON PAGES 1 TO 7 OF PB ARE TO BE CONSIDERED AS DETAILS IN COMPLIANCE OF RULE 6ABA, THE MATTER SHOULD GO BACK TO THE LD. CIT(APPEALS) FOR FRESH DE CISION AFTER OBTAINING REMAND REPORT OF THE AO. 8. THE LD. AR OF ASSESSEE SUPPORTED THE ORDER OF CI T (APPEALS). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER ASSESSMENT ORDER, IT IS THE OBJECTION OF THE AO THA T THE DETAILS AS PER REQUIREMENT OF RULE 6ABA ARE NOT FURNISHED BEFORE H IM. IN THE PB PAGES 1 TO 7, SOME DETAILS ARE MADE AVAILABLE BEFORE US, BU T AS PER THE CERTIFICATE GIVEN IN THE PB, ALL THESE DETAILS WERE FILED BEFOR E THE CIT (APPEALS) AND THE SAME WERE NOT FILED BEFORE THE AO. WE ALSO FIN D THAT NO REMAND REPORT HAS BEEN OBTAINED BY THE LD. CIT (APPEALS) FROM THE AO. UNDER THESE FACTS, WE FIND FORCE IN THE CONTENTION OF THE LD. D R OF REVENUE THAT THIS MATTER SHOULD GO BACK TO THE FILE OF LD. CIT(APPEAL S) FOR FRESH DECISION AFTER OBTAINING REMAND REPORT FROM THE AO ON THIS ISSUE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT (APPEALS) ON THIS IS SUE AND RESTORE THE MATTER BACK TO HIS FILE FOR A FRESH DECISION IN LIGHT OF O UR ABOVE OBSERVATIONS, AFTER ITA NO.592/BANG/2014 PAGE 6 OF 12 AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.4 IS AS UNDER:- 4. THE LEARNED CIT(A) ERRED IN ALLOWING THE DISALL OWANCE MADE WITH REGARD TO EXCESS CLAIM OF SALARY WITHOUT APPRECIATING THE FACT THAT THE CLAIM MADE BY THE ASSESSEE BANK I NCLUDES SALARY ARREARS OF ACCOUNTING YEAR 2007-08 AND 2008-09 WHIC H WOULD HAVE BEEN RELATED BACK TO THE RESPECTIVE FINANCIAL YEAR PROFITS. 11. IT IS SUBMITTED BY THE LD. DR OF REVENUE THAT B OARD RESOLUTION AND LETTER OF GOVT. OF INDIA, MINISTRY OF FINANCE, DEPA RTMENT OF FINANCIAL SERVICES AVAILABLE AT PAGES 8 & 9 OF PB ARE DATED 2 4.7.2010 AND 31.8.2010 I.E. IN THE NEXT YEAR AND THEREFORE, IT CANNOT BE S AID THAT EXPENSES HAD CRYSTALLISED DURING THE PRESENT YEAR. HE SUBMITTE D THAT UNDER THESE FACTS, THESE EXPENSES OF EARLIER YEAR CANNOT BE ALLOWED IN THE PRESENT YEAR AND THEREFORE, ON THIS ISSUE, THE ORDER OF LD. CIT (A) SHOULD BE REVERSED AND THAT OF THE AO SHOULD BE RESTORED. 12. AS AGAINST THIS, THE LD. AR OF ASSESSEE SUPPORT ED THE ORDER OF LD. CIT (APPEALS). HE ALSO SUBMITTED THAT RETURN OF INCOME WAS FILED ON 30.9.2010, AS CAN BE SEEN FROM PAGE 2 OF ASSESSMENT ORDER AND THEREFORE, THE BOARD RESOLUTION DATE IS PRIOR TO THE DATE OF FILING OF R ETURN OF INCOME AND HENCE, THIS DEVELOPMENT CAN BE CONSIDERED IN THE PRESENT Y EAR ALSO. HE STRONGLY SUPPORTED THE ORDER OF LD. CIT (APPEALS) ON THIS IS SUE. ITA NO.592/BANG/2014 PAGE 7 OF 12 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT AS PER PAGE 9 OF PB, THERE IS A LETTER DATED 24.7.2010 ISSUED B Y GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF FINANCIAL SERVICES IN RES PECT OF REVISION OF PAY & ALLOWANCES OF ALL REGIONAL RURAL BANKS EMPLOYEES W. E.F. 1.11.2007. SO, ON THE BASIS OF COMMUNICATION RECEIVED FROM GOVT. O F INDIA, MINISTRY OF FINANCE, THE BOARD OF ASSESSEE BANK AS PER ITS RESO LUTION DATED 31.8.2010 HAS DECIDED TO MAKE PAYMENT OF ARREARS FOR THE PERI OD FROM 1.11.2007 TO 31.7.2010. NO DOUBT, THIS DATE OF BOARD RESOLUTIO N AND THE LETTER FROM GOVT. OF INDIA, MINISTRY OF FINANCE IS SUBSEQUENT T O THE PRESENT ACCOUNTING YEAR I.E., ACCOUNTING YEAR 2009-10 RELEVANT TO A.Y. 2010-11 BUT IT IS ALSO TRUE THAT THESE DATES ARE PRIOR TO THE DATE OF FILI NG OF RETURN OF INCOME BY THE ASSESSEE AND THEREFORE, THE LIABILITY HAS CRYSTALLI SED PRIOR TO THE DATE OF FILING OF RETURN OF INCOME. IN OUR CONSIDERED OPIN ION, UNDER THESE FACTS, PROVISION SHOULD BE MADE IN THE ACCOUNTS FOR THE YE AR WHICH WERE NOT FINALISED AT THAT POINT OF TIME I.E., CRYSTALLISATI ON OF LIABILITY. SO UNDER THESE FACTS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT (APPEALS). ACCORDINGLY, GROUND NO.4 OF REVENUE IS REJECTED. 14. GROUND NOS. 5 & 6 ARE AS UNDER:- 5. THE LEARNED CIT(A) ERRED IN ALLOWING AMORTIZATI ON OF PREMIUM PAID ON GOVERNMENT SECURITIES OVER REMAININ G LIFE OF THE SECURITIES EVEN THOUGH SUCH EXPENDITURE WAS DIS ALLOWED BY THE AO RELYING ON THE CBDT INSTRUCTION 17/2008. 6. THE LEARNED CIT (A) ERRED IN NOT RELYING ON THE DECISION IN THE CASE OF VIJAYA BANK VS ADDL.CIT, 187 ITR 541 ON THE ISSUE ITA NO.592/BANG/2014 PAGE 8 OF 12 OF AMORTIZATION OF PREMIUM PAID ON PURCHASE OF GOVE RNMENT SECURITIES. 7. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE T O ONE ANOTHER AND THE APPELLANT CRAVES TO ADD, DELETE, AM END OR OTHERWISE MODIFY ONE OR MORE OF THE ABOVE GROUNDS E ITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 15. THE LD. DR OF REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. AR OF ASSESSEE SUPPORTED THE ORDER OF CIT ( APPEALS). IT WAS ALSO SUBMITTED BY THE LD. AR OF ASSESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR AY 2007-08 IN ITA NO.146 & 224/BANG/2011 DATED 15.6.2012 AND ALSO BY ANOTHER TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR THE AY 2009-10 IN ITA NO.1046/BANG/2013 DATED 3.12.2014. HE SUBMITTED COP Y OF BOTH THE TRIBUNALS ORDERS. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN AY 2007- 08 IN THE REVENUES APPEAL IN ITA NO.146/BANG/2011 (SUPRA), THIS VERY ISSUE WAS RAISED BY THE REVENUE BEFORE THE TRIBUNAL AND THE SAME WAS DECIDED BY THE TRIBUNALS ORDER AS PER PARA 7. FOR THE SAKE OF READY REFERENCE, PARA 7 OF THIS TRIBUNALS ORDER IS REPRO DUCED HEREINBELOW:- 7.1 THE GROUNDS OF APPEAL RAISED BY REVENUE ARE AS UNDER: 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT AMORTIZ ATION OF PREMIUM PAID ON GOVERNMENT SECURITIES IS AN ALLO WABLE EXPENDITURE IGNORING THE PARA 2(VI) OF THE CBDT INSTRUCTION NO.17 OF 2008 DATED 26/11/2008. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT AMORTIZA TION OF PREMIUM PAID ON GOVERNMENT SECURITIES OVER ITA NO.592/BANG/2014 PAGE 9 OF 12 REMAINING LIFE OF THE SECURITIES AS AN ALLOWABLE EXPENDITURE IGNORING THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF VIJAY BANK VS. ADDL. CIT 187 I TR 541 (SC) 7.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AMORTIZATI ON OF PREMIUM PAID ON GOVT. SECURITIES IS AN ALLOWABLE EXPENDITUR E IGNORING THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF V IJAYA BANK REPORTED IN 187 ITR 541 IN PARA 2(VII) OF CBDTS IN STRUCTION NO.17 OF 2008. 7.3 THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE FINDING OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF RS.4,84,11,629 MADE BY THE ASSESSING OFFICER IN RES PECT OF AMORTIZATION OF PREMIUM ON PURCHASE OF GOVT. SECURI TIES IN ACCORDANCE WITH THE CBDTS INSTRUCTION NO.17 VIDE P ARA 2(VII) DT.26.11.2008. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH O F THIS TRIBUNAL IN THE CASE OF SIR M. VISHVESHWARAYA CO-OPERATIVE B ANK LTD. VS. JCIT IN ITA NO.1122/BANG/2010 DT.11.5.2012 ( A COPY OF WHICH IS PLACED ON RECORD.) THE LEARNED COUNSEL FOR THE A SSESSEE DREW OUR ATTENTION TO PARA 4 TO PARA 8 OF THIS ORDER IN WHICH AN IDENTICAL ISSUE ON AMORTIZATION OF PREMIUM ON INVESTMENTS WAS EXHAUSTIVELY CONSIDERED BY THIS TRIBUNAL AFTER WHIC H IT HELD THAT THE ASSESSEE WAS ENTITLED TO SUCH DEDUCTION. IN THE SE CIRCUMSTANCES, THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED THAT SINCE THE DECISION OF THE TRIBUNAL IS SQUARELY APPL ICABLE TO ITS CASE, AND IS IN ITS FAVOUR, REVENUES APPEAL ON THI S POINT IS LIABLE TO BE DISMISSED. 7.4 WE HAVE HEARD BOTH PARTIES AND HAVE CAREFULLY P ERUSED AND CONSIDERED THE MATERIAL ON RECORD AND THE JUDICIAL DECISIONS CITED OF VARIOUS BENCHES OF THE TRIBUNAL IN RESPECT OF TH E ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF EXPENDITURE INCUR RED ON AMORTIZATION OF PREMIUM ON PURCHASE OF GOVT. SECURI TIES AMOUNTING TO RS.4,84,11,629. WE FIND FROM A PERUSAL OF THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF SIR M. VISHVESWARAYA CO-OP. BANK LTD. (SUPRA) THAT THE TRIBUNAL HAD OCCASION TO CONSIDER A SIMILAR ISSUE OF AMORTIZ ATION OF PREMIUM ON INVESTMENTS EXHAUSTIVELY AT PARAS 4 TO 8 THEREOF AFTER WHICH IT HELD THAT THE ASSESSEE WAS ENTITLED TO SUC H DEDUCTION. THE OPERATIVE PART OF THE SAID ORDER AT PARA 8 THER EOF, IS AS UNDER: ITA NO.592/BANG/2014 PAGE 10 OF 12 08. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS AND PERUSED THE RELEVANT FACTS AND MATERIALS ON RECORD. WE HAVE ALSO CONSIDERED THE FINDINGS OF THE VARIOUS BENCHES OF THE TRIBUNAL, AS UNDER: (I) CATHOLIC SYRIAN BANK LTD V. ACIT (2010) 38 SOT 553 (COCH) : AN IDENTICAL ISSUE TO THAT OF THE SUBJECT MATTER UN DER CONSIDERATION HAD ARISEN BEFORE THE COCHIN BENCH. AFTER ANALYZING THE ISSUE IN DEPTH, THE BENCH HAS OBSERVED THAT WITH REGARD TO AMORTIZATION OF PREMIU M ON PURCHASE OF GOVERNMENT SECURITIES, IT WAS CLARIF IED THAT THIS WAS MADE AS PER THE PRUDENTIAL NORMS OF T HE RBI. FOLLOWING THE TRIBUNAL DECISION IN THE ASSESSE E'S OWN CASE AND CONSIDERING THAT THE ASSESSEE BANK IS FOLLOWING CONSISTENT AND REGULAR METHOD OF ACCOUNTING SYSTEM, THERE IS NO JUSTIFICATION IN INTERFERING WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE OF AMORTIZATION OF PREMIUM ON GOVERNMENT SECURITIES. UNITED COMMERCIAL BANK V. CIT (1999) 156 CTR (SC) 380; (1999) 240 ITR 355 (SC) AND SOUTH INDIAN BANK LTD., (ITA NO.126/COCH/2004,DATED.___ SEPT, 2005 FOLLOWED.' (II) THE KHANAPUR CO-OP BANK LTD V. ITO ITA NO.141/PNJ/2011,DATED.8.9.2011: THE HON'BLE BENCH OF PANAJI TRIBUNAL HAD RECORDED ITS FINDINGS THAT '6. LIKEWISE, THE PREMIUM AMORTIZ ED AT RS.1,78,098/- IS CLAIMED TO BE IN RESPECT OF SECURITIES HELD UNDER THE CATEGORY 'HELD TO MATURIT Y'. THE ASSESSING OFFICER HAS TAKEN THEM AS LONG TERM INVESTMENTS. IN OTHER WORDS, HE HAS ACCEPTED THE ASSESSEE'S CLAIM THAT THE SECURITIES ARE 'HELD TO MATURITY'. THAT BEING SO AND HAVING REGARD TO THE CBDT INSTRUCTION NO.17 OF 2008 DATED.26.11.2008 AS REPRODUCED HEREIN ABOVE, THE PREMIUM PAID ON SUCH GOVERNMENT SECURITIES IS REQUIRED TO BE ITA NO.592/BANG/2014 PAGE 11 OF 12 AMORTIZED OVER THE PERIOD REMAINING TO MATURITY ..........' (III) IN THE CASE OF CORPORATION BANK V. ACIT, M'LO RE IN ITA.112/BANG/2008 (BANG), FOR THE ASSESSMENT YEAR 2004-05, THE EARLIER BENCH HAD ALSO HELD A SIMILAR VIEW. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE CASE LAWS DISCUSSED SUPRA, TAKING INTO ACCOUNT THE TOTALITY OF THE FACTS AND MATERIALS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED TO CL AIM THIS DEDUCTION AND HENCE WE ALLOW THE GROUNDS OF TH E ASSESSEE RELATING TO THIS ISSUE. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SIR M. VISHVESWARAYA CO-OPERATIVE BANK LTD. (SUPRA) , WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION ON ACCOU NT OF AMORTIZATION OF PREMIUM ON GOVT. SECURITIES AND THE REFORE NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEAR NED CIT(A). CONSEQUENTLY, THE GROUNDS RAISED BY REVENUE ON THIS ISSUE ARE DISMISSED. 17. SUBSEQUENTLY FOR AY 2009-10 IN ASSESSEES OWN C ASE, SIMILAR ISSUE WAS RAISED BY THE REVENUE BEFORE THE TRIBUNAL AND T HE SAME WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF ASSESSEE BY FOLLOWING THE TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR THE AY 2007-08. 18. IN THE PRESENT YEAR, NO DIFFERENCE IN FACTS COU LD BE POINTED OUT BY THE LD. DR OF REVENUE AND THEREFORE, WE FIND NO REASON TO TAKE A CONTRARY VIEW. ACCORDINGLY, IN THE PRESENT YEAR, WE DECLINE TO INT ERFERE IN THE ORDER OF LD. CIT(APPEALS) ON THIS ISSUE. GROUND NOS.5 & 6 OF TH E REVENUES APPEAL ARE REJECTED. ITA NO.592/BANG/2014 PAGE 12 OF 12 19. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF MAY 2016. SD/- SD/- (SUNIL KUMAR YADAV ) ( A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 06 /05/2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.