TaxTMI 
TaxTMI 
2013 (8) TMI 476
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....off by this consolidated order for the sake of convenience. Reference is made to the facts in ITA No. 1112/Chd/2010 in order to dispose off the issue. 3. The Revenue has raised the following grounds of appeal in ITA No. 776/Chd/2011: "1. The CIT(A) has erred in deleting the addition of Rs. 9,13,10,579/- on account of interest on outstanding loans. 2. The appellant craves to add or amend any ground any grounds of appeal before the appeal is heard or disposed off. 3. It is prayed that the order of the ld. CIT(A) be cancelled and that of the AO may be restored." 4. The Revenue has raised the following grounds of appeal in ITA No. 1112/Chd/2010: "1. The CIT(A) has erred in deleting the addition of Rs. 3....
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....ad paid rescheduled installments and interest thereof, which had been accounted for in the books of account. As per the aforesaid list, the total number of parties were 10. The AO because of the scheme of the assessee i.e. special settlement scheme for borrowers of PSCB, was of the view that charging of simple interest @ 12% was necessary and the assessee was liable to show interest on the said loans @ 12% as it was following mercantile system of accounting. The auditor in their method of accounting had reported that the assessee was following mercantile system of accounting except income on NPAs was accounted on cash basis. Rejecting the explanation of the assessee and in view of the clarification of the ld. counsel for the assessee on 24.....
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....d had not reflected interest on loans as part of its income. The ld. DR for the revenue further stated that the CIT(A) had deleted the addition without going into the facts of the case. 8. The ld AR for the assessee pointed out that where the assessee had deposited the loan recoverable and interest, the interest had been credited and accounted for in the books of account and shown as income for the year under consideration, but where litigation was pending and even the recovery of the said loan could not be effected, no provision for interest on accrual basis, was made. The ld AR for the assessee further placed reliance on the under mentioned ratios: i) Karnavati Coop Bank Ltd V. DCIT, 134 ITD 486 (Ahm): ii) Vijaya Bank V. CIT and ....
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....vii) of the Act. Further the assessee during the year under consideration had declared income of Rs. 1,28,16,757/- on account of interest on loans as a result of one time settlement or under the waiver scheme of the bank. 11. Perusal of the details of loans and advances as tabulated in para 3 of the assessment order reveals that in respect of party No. 1, BIFR had declared company as sick unit on 10.7.2006 and the settlement in the case was approved on 10.9.2009. Similarly in respect of party No.2, dispute was pending before the court and the company had opted for special settlement scheme on 31.12.2007. However, during this year the assessee had received and credited Rs. 3,60,713/- as interest income on the said loan. In respect of part....
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....revious year in which the same is credited to the Profit & Loss Account for that year or as the case may be, in which year it is actually received by the institution or bank or other bodies, which ever is earlier. 14. In the facts of the present case the above said loans were advanced since 1999 and they had become NPAs against which suits for recovery were filed by the assessee in various Courts. In view of the assessee having neither received the loans or part thereof nor any interest therefrom, no interest was provided in the books of account as the recovery of the loans itself had become difficult. Admittedly, the assessee was following mercantile system of accounting under which income is to be recognized when the same accrues irres....
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.... deletion of addition of Rs. 3.00 lakh out of audit fee paid. The CIT(A) had allowed the claim of the assessee observing as under:- "14 After considering the rival contention, I find that the audit fee pertaining to the AY ending 31.3.2006 was received as per letter dated 25.7.2006 by Registrar, Cooperative Societies, Punjab, Chandigarh vide letter No. 70/17/90/C-I(5)/8775. The earlier fee of Rs. 7 lacs was provided in the books of account as on 31.3.2006 on the basis of old rates which were revised and paid by the assessee on 13.7.2006 vide State Bank of India draft bearing No. 385926 dated 13.7.2006 (Account No. 01000140211). It is also revealed from record that revised fee has been charged in all subsequent years. 15. S....