The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has held that depreciation claimed for the Government securities categorised as AFS is allowable
The appellant was represented by Shri Rahul Patel and the respondent was represented by Shri Urjit Shah.
The appellant assessee was a Cooperative Bank which had claimed depreciation of Rs.4,68,391/- in the value of Govt. securities held by it. The assessee contended that these securities were classified as Available for Sale (AFS), as per the RBI guidelines in this regard which required all investments made by the assessee to be categorized as (i) Available for Sale (AFS) (ii) Held till maturity (HTM) and (iii) Held for trading (HFT). The AO viewed an investment of Rs. 8,23,72763/-was HTM category and held that depreciation was not liable on investment under HTM category, further disallowed deprecation 468390/-.
The appellant submitted that all investment under the head Central and State Government securities is under the Available For Sale (AFS) category and further stated that as per RBI guidelines no bank was permitted to keep more than 25% investment in the HTM category.
It was observed that the appellant all the investments are in AFS category and observed that records of the securities about the categories to which it relates have to be maintained.
Ms Annapurna Gupta, AM & Shri Mahavir Prasad, JM directed to restore the issue to the A.O to first determine the classification of the securities whether AFS or HTM or HFT and thereafter decide the issue of allowability of claim of depreciation. The appeal was allowed for statistical purposes.
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