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JUDGMENT B.P. Colabawalla, J. - This Appeal under section 260A of the Income Tax Act 1961, has been filed by the Commissioner of Income Tax-2 challenging the order passed by the Income Tax Appellate Tribunal (hereinafter referred to as the ITAT) dated 29th June 2011. By the impugned order, the ITAT dismissed the Appeal filed by the Revenue in relation to Assessment Years 2001-02, 2002-03, 2003-04, 2004-05 and 2005-06. 2. Mr Suresh Kumar, the learned counsel appearing on behalf of the Appellant, submitted that the impugned order passed by the ITAT requires interference and gives rise to substantial questions of law that need to be answered by this Court and read as under :- "(A) Whether on the facts and in law, the Hon'ble Tribunal was correct in holding that the investment in tax free securities/investments are represented by assessee's own funds in the shape of share capital and reserves, ignoring the fact that the assessee is a bank involved in transactions of money in various forms and treasury operations is only out of its functions ? (B) Whether the ITAT was correct in law in holding that the broken period interest is allowable as a deduction, inspite of the Hon'ble Supreme Court's decision in the case of CIT v. Vijay Bank (187 ITR 541) and the Rajasthan High Court's decision in the case of Bank of Rajasthan (316 ITR 391) ? (C) Whether the ITAT is right in law in holding that the assessee is entitled for deduction with respect to the diminution in value of the investment and amortization of premium on investment held to maturity on the ground of mandate by RBI guidelines thereby ignoring the decision of the Supreme Court in the case of Southern Technologies v. CIT (320 ITR 577) ?" 3. With reference to question (A), Mr Suresh Kumar submitted that the ITAT erred in holding that the investments of the Assessee in tax free securities / investments were from the Assessee's own funds. Since the Assessee had paid interest on borrowed funds and and the Assessee's own funds were not separately identified, the investment in Government securities had been made by the Assessee Bank from common pool of funds available with it. According to Mr Suresh Kumar, as per the…

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