2016 (1) TMI 575

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....ssed in earlier years. 1.1. That the Ld. CIT(A) failed to appreciate that excess interest of Rs. 1,39,39,304/- assessed to tax in earlier years was on account of Non- performing assets (NP As) and according to RBI guidelines no interest on such NP As can be charged and if already charged, such interest is to be reversed in the account. and it was this excess interest charged in earlier years which was claimed as deduction. 1.2. That the Ld. CIT(A) was wrong in confirming the disallowance of Rs. 1,39,39,304/- on the ground that such deduction can not be allowed uls 29, 37,30 to 42D of Income Tax Act, 1961. 1.3. The Ld. CIT(A) should have treated the above amount of Rs.l,39,39,304/-as bad debts written off and should have allowed deduct....

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.... appellant has shown excess interest income in earlier years on certain accounts, which have actualy been converted into NPAS ,according to RBI guidelines and that according to the RBI Guidelines, no interest on NPAS becomes due to a banking company. As such the excess interest income shown .by the. Appellant in earlier years has been reversed in the year under appeal on the basis of Audit Report, by passing an accounting entry. The reversal of such interest by an accounting entry cannot be said to be an expenditure incurred by the appellant laid out, or .expanded wholly and exclusively for the purpose of business .or profession, as such no deduction of the impugned amount can be allowed under section 37. Further, since, the above amount do....

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....ijaya Bank vs CIT & Anr. (2010) 231 CTR (SC) 209 : (2010) 37 DTR (SC)401 (2010) 323 ITR 166 (SC) and T.R.F.Ltd vs CIT (2010) 230 CTR (SC) 14 : (2010) 35 DTR (SC) 156 : (2010) 323 ITR 397 (SC)." 7. The next decision is the decision rendered by ITAT, Hyderabad Bench in the case of Andhra bank vs DCIT in ITA No.218/H/10 order dated 04.04.2013. In the aforesaid decision ITAT took the following view :- "59. The next is regarding deduction of Rs. 23600000 being unrealized interest on NPA which is reduced from the interest income. The assessee had recognized interest of Rs. 23600000/- on certain accounts during the assessment year 2005-06 the same was offered to tax also. These accounts became NPA during the assessment year 2006-07 the assessee....

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....d by the assessee." 8. The ld. DR, on the other hand, relied on the decision of the Hon'ble Supreme Court rendered min the case of Southern Technical 320 ITR 577 (SC) wherein the Hon'ble Supreme Court took a view that provision of RBI are not pending while computing the income of the assessee. 9. We have considered the rival submissions. The decision referred to by the ld. Counsel for the assessee supports the claim of the assessee for deduction on the ground that the claim for deduction has to be allowed as bad debt or as loss incidental to the business. We are of the view that since the claim is not being allowed on the ground that the debt in question is a non-performing assets, the decision cited by the learned DR is not relev....