Amortisation of Investment

This query is : Resolved

Report Abuse Follow Query Ask a Query

CA Harshad Deshpande

CA Harshad Deshpande (Querist)
Follow

30 December 2009 is amortisation of investments a valid deduction as far as Banking Cos. are concerned?

Sudhindra

Sudhindra (Expert)
Follow

30 December 2009 Its not amortisation of investments its amortisation of premium on investments as this is the cost paid over and above the face value which is called the premium, or rather the command over the security which is demanding in the market at any point of time, since the benefit is accruing to the company over a period the cost ove the same has also to be equally shared over the period and hence the same cannot contribute to the cost in only the year of purchase, hence since the benefit accrues over a period of time the cost is also to be equally shared or spread.