TaxTMI 
TaxTMI 
2015 (9) TMI 744
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....ting the addition of Rs. 16,01,362/- made by the Assessing Officer being interest taxed on accrual basis on Non Performing Assets(NPA). 2) On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad ought to have upheld the order of the Assessing Officer. 3) It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax(Appeals)-XX, Ahmedabad may be set-aside and that of the Assessing Officer be restored. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 27/12/2010, thereby the Assessing Officer (AO in sh....
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....t accrued on the NPAs was shown in the balance sheet but was not credited to the P & L account and therefore in accordance with section 145 addition of interest accrued on NPAs of Rs. 16,01,362/- was being made. The contentions of the learned AR in brief are that appellant was bound to follow the RBI Act and the Prudential Norms there-under; the interest income on NPAs had neither accrued nor received within the meaning of section 5 of the IT Act; the interest was reflected in the balance sheet in accordance with the guidelines of the RBI; however, since the principal amount itself was doubtful of recovery, the interest thereon was not recognized by the appellant; as and when the interest was being received on the NPAs it was being offered ....
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....bunal in its order had relied on the two decisions of the Division Bench of this Court in CIT vs. Elgi Finance Ltd. (2007) 293 ITR 357 (Mad) and in CIT vs. India Equipment Leasing Ltd. (2007) 293 ITR 350 (Mad). In the latter decision, in which one of us is a party, has considered the case of the assessee in respect of hire-purchase transactions and leasing of plant and machinery, has held that interest on "sticky' loans not being brought into the P&L a/c, but being taken to the suspense account was an accepted mode of treatment of notional income in accounting practice. The fact that the assessee, although generally using the mercantile system of accounting, kept such interest amount in a suspense account and did not bring those amounts....