C/TAXAP/782/2019 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 782 of 2019 PRINCIPAL COMMISSIONER OF INCOME TAX-1 Versus KALUPUR COMMERCIAL CO-OP BANK LTD. Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 06/01/2020 ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. This tax appeal under Section 260A of Income Tax Act, 1961 [for short Act, 1961 ] is at instance of revenue and is directed against order passed by Income Tax Appellate Tribunal, 'D' Bench, Ahmedabad in ITA No.1864/AHD/2017, dated 18/06/2019 for A.Y 2014 15. 2. revenue has proposed following question of law in its memorandum of tax appeal: Whether on facts and in circumstances of case and in law, Appellate Tribunal was justified in deleting addition made by Assessing Officer on issue of disallowance of Amortized Premium amounting to Rs.3,15,81,243/ ? 3. We take notice of fact that proposed question of law is no Page 1 of 3 Downloaded on : Tue Jan 07 10:27:18 IST 2020 C/TAXAP/782/2019 ORDER longer res integra in view of decision of this Court in case of Commissioner of Income tax, Rajkot II Vs. Rajkot District Co op. Bank Ltd. reported in [2014] 222 taxmann 240 (Gujarat), wherein this Court observed as under: 5. learned counsel Shri P.G. Desai for appellant vehemently contended that Tribunal committed serious error in overruling decision of CIT (Appeals), who had given detailed reasons. He submitted that investment was in nature of capital investment in hands of assessee as held by CIT (Appeals). CBDT Circular dated November 26, 2008 would not apply. There were further instructions which would govern situation. 6. On other hand, learned counsel Shri Tushar Hemani for respondent placed heavy reliance on said CBDT Circular dated November 26, 2008 and contended that benefit of amortisation had to be granted. assessee as cooperative bank was bound by RBI directives. As per such directives, assessee had to invest certain amounts in Government securities and to hold same till maturity. In process of acquisition, if there was any premium paid on face value of security, loss had to be amortised. Paragraph (vii) of CBDT Circular No.17 of 2008 dated November 26, 2008 would apply. Such instruction reads as under : (vii) As per RBI guidelines dated 16th October, 2000, investment portfolio of 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 face value, in which case premium should be amortised over period remaining to maturity. In case of HFT and AFT securities forming stockintrade of bank, depreciation/ appreciation is to be aggregated scripwise and only net depreciation, if any, is required to be provided for in accounts. latest guidelines of RBI may be referred to for allowing any such claims. 7. instructions clearly provide for amortisation of premium paid on acquisition of securities when same are acquired at rate higher than face value. Such amortisation would have to be for remaining period of maturity. This precisely Tribunal had directed in impugned order. Though contended, no contrary instructions of CBDT are brought to our notice. instruction in question having Page 2 of 3 Downloaded on : Tue Jan 07 10:27:18 IST 2020 C/TAXAP/782/2019 ORDER been issued under section 119(2) of Income tax Act, 1961, would bind Revenue. No question of law, therefore, arises. 4. In view of aforesaid, this appeal stands dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) aruna Page 3 of 3 Downloaded on : Tue Jan 07 10:27:18 IST 2020 Principal Commissioner of Income-tax-1 v. Kalupur Commercial Co-op Bank Ltd