The Tax Publishers2015 TaxPub(DT) 5369 (Pune-Trib)div class=Section1>

 

Satara District Central Co-op. Bank Ltd. v. Dy. CIT

 

INCOME TAX ACT, 1961

--Business expenditure--AllowabilityAmortization of premium on HTM securities--The assessee debited certain amount, on account of amortization of premium on purchase of Government Securities. The explanation of the assessee for allowability of the claim under section 37(1) was that the said investment was made by assessee bank in Government Securities in the course of banking and for the purpose of business of banking. The assessee further claimed that the securities held by the assessee bank under the Banking Regulation Act or as per the guidelines of RBI formed part of the banking business and was, therefore, stock-in-trade irrespective of the fact that whether the investments were made out of the capital surplus funds or reserves. The CIT(A) upheld the order of the AO. Held: The Bombay High Court in CIT v. HDFC Bank (supra) held that the assessee therein was entitled to deduction with respect to the diminution in the value of investments and amortization of premium on investments in securities viz. Held-to-Maturity on the ground of mandate of the RBI guidelines. The issue raised in the present appeal was identical to the issue before the Pune Bench of the Tribunal in the assessee's own case for assessment year 2008-09 and Bombay High Court in CIT v. HDFC Bank (supra). Amortization of premium expenditure for securities Held-to-Maturity in view of RBI guidelines are allowable business expenditure in the case of assessee.

Income Tax Act, 1961, Section 37(1)

Income Tax Act, 1961, Section 35D

Followed:Pune District Central Co. Operative Bank Ltd. ITA No. 1796/PN/2013, vide order dated 28-11-2014, relating to assessment year 2009-10 and CIT v. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10


 

INCOME TAX ACT, 1961

--Business expenditure--AllowabilityProvision for donation and subscription--The AO during the course of assessment proceedings noted that the assessee had made a provision for donation and subscription. As nothing was incurred by the assessee, the AO disallowed the said provision made by the assessee. The CIT(A) in the absence of any expenditure having been incurred by the assessee, upheld the disallowance. Held: There was no merit in the claim of the assessee, where only a provision for donation and subscription to the extent of Rs. 5,00,000 had been made in the books of account and no actual expenditure had been incurred by the assessee. Merely because the Board of the bank had passed a resolution for incurring the said expenditure, did not entitle the assessee to the said claim in the absence of having incurred any expenditure on donation and subscription.

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