TaxTMI 
TaxTMI 
2015 (2) TMI 289
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.... A.O., Assessee carried the matter before CIT(A) who vide order dated 18.01.2014 granted partial relief to the Assessee. Aggrieved by the aforesaid order of CIT(A), Assessee is now in appeal before us and has raised the following grounds;- 1. Ld. Commissioner of Income Tax ( Appeals 1 - II, Ahmedabad erred in law as well as facts in confirming addition of Rs. 67,21,070/- on amount of unrealizable interest on non-performing advances ( considered as sticky accounts ) which was not recognized as revenue by the assessee bank following theory of real income while determining accrued income as per provisions of section 145 of the Income Tax Act, 1961. 2. Ld. Commissioner of Income Tax ( Appeals) - II, Ahmedabad erred in facts as well as in law in confirming addition of Rs. 40,35,373/- pertaining to an amount of interest income already recognized as income in the preceding years following erstwhile guidelines of Reserve Bank of India. 3. Ld. Commissioner of Income Tax ( Appeals ) - II, Ahmedabad not correc....
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....d in section 145(1) of the Act alongwith method of accounting followed by the appellant, it is clear that the amount of Rs. 67,21,070/- should have been credited to the P&L Account on the basis of section 145(1) of the Act. The appellant company can follow the guidelines of the RBI for their own banking activities and also as per IRAC but for the purpose of computation of income under Income-tax Act, the provisions as per I.T. Act should have been followed. Even otherwise, the A.R. has not been able to establish with any supporting proof/evidence that the said amount pertaining to loans given to various clients, actually has become irrecoverable. There could be different criteria for identifying sticky loans or the loans in the category of NPAs but that does not necessarily mean that the amount had become absolutely irrecoverable. It has not been shown as to what steps were taken by the appellant bank for recovery of the said loans and whether the amount had become actually and finally unrealizable. It has also not been explained as to what is the time limit or border line beyond which the loan could be said as unrealizable. The wordings of section 145(1) are very clear that in ....
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.... to indicate that the interest income on the advances which have been classified by Assessee to be NPA accounts are non recoverable. We further find that before the Hon'ble Madras High Court in the case of Sakthi Finance Ltd. vs. CIT (2013) 352 ITR 102 (Madras) the issue was as to whether non recognition of "interest income" on NPAs by Assessee following RBI guidelines would by itself constitute a valid ground for not recognizing the said income on the basis of its non accrual, the adopted method of accounting being admitted mercantile. The Hon'ble High Court after relying on the decision of Hon'ble Supreme Court in the case of Southern Techonologies Ltd. (2010) 320 ITR 577, has noted that mere characterization of an account as an NPA would not by itself be sufficient to say that there is uncertainty as regards reliability of income or interest income thereon. Accrual of interest is a matter of fact to be decided separately for each case on the basis of examination of facts and circumstances and it would require the assessment of the relevant facts and circumstances of each case. Only by assessment of facts and circumstances, the authority could arrive at a decision whether there i....
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....uction was available to Co-op. Banks u/s. 80P(2) of the Act. A.O noticed that from Financial Year 2007-08, Assessee bank has not offered the income on account of interest on NPA account. He was therefore of the view that deduction claimed by the Assessee as prior period interest is basically double deduction and he accordingly disallowed the claim of Assessee. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) upheld the addition made by A.O by holding as under:- 5.2 On careful consideration, I come to the conclusion that the Assessing Officer was justified in disallowing the amount of Rs. 40,35,373/- which was claimed as deduction in the name of prior period interest. The disallowance is confirmed. The ground of appeal fails. 9. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 10. Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A) and further submitted that the income has already been offered to tax in earlier years. He therefore submitted that the Assessee be allowed the deduction. The ld. D.R. on the other hand supported the orde....
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.... wrong. Taking into account, the facts of the case and the material on record, I arn of the view that entire disallowance of Rs. 19,95,532/- would be unjustified because the expenses under the head advertisement expenses, consultancy fees, building maintenance, office rent are necessarily incurred in the course of banking business of the bank. However, considering the discrepancy mentioned by the Assessing Officer and inability of the A.R. to substantiate his contention, I confirm the disallowance to the extent of Rs. 20% and the balance 80% of the amount is allowed. The appellant gets part relief accordingly. The grounds of appeal are disposed off accordingly. 13. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 14. Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A) and further submitted that A.O had wrongly considered expenditure pertaining to the Branch as well as head office for arriving at the conclusion that the expenses have not been explained. He further submitted that the Assessee is a bank governed by the RBI guidelines and is subject to statutory audit. He also pointed to the clarification that was submitted and placed at pa....