TaxTMI 
TaxTMI 
2013 (2) TMI 731
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....he learned CIT(A) has misread the Supreme Court decision in the case of UCO Bank 237 ITR 889 and Board Circular dated 09.10.1984. 1.2 The appellant says and submits that the assessee is a Co.op. Bank and classifies the NPA Account as per Reserve bank of India guidelines and that as per the RBI Guidelines, the bank is not required to change interest on NPA Account. However, the assessee bank for the purpose of accounting debits interest receivable on NPA Account and credits to interest on NPA Anamat Account." 2. The appellant is a Cooperative Society in banking activity. The A.O. scrutinized the case u/s. 143(3). It was noticed that the appellant had shown interest of NPA at Rs. 1,45,95,852/- which has been shown as "Mudat Viti Vyaj Anama....
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....r the same. It is submitted by the appellant that as per the RBI guidelines there is no interest to be charged on NPA. It is further submitted by the appellant that income from NPA should be recognized only when it is actually received. But the submission of the appellant is not found to be acceptable. As per the AO, in the case of the appellant there was progressive total interest of Rs. 1,45,95,852/- on NPA accounts which was shown as "Mudat Viti Vyaj Anamat" on capital and liability side in the balance sheet as on 31/03/2009. As per the AO, out of the interest of Rs. 1,45,95,852/-, the interest of Rs. 1,58,897/- was interest for the previous year relevant to within the period of 3 years. I agree with the view of the AO that as per Board'....
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.... is a Cooperative bank engaged in carrying on banking business. During A.Y. 2009-10, the assessee passed book entry for interest of Rs. 1,58,897/- on NPA account by debiting to time barred interest receivable account and crediting to provision for time barred interest. Both the accounts are reflected in the balance sheet on the assets side and liability side. NO such interest is credited to p&l account as income. He further relied RBI Master Circular updated 30.06.2007, wherein it was policy as per the RBI guideline income from non performing assets is not recognized on accrual basis but is booked as income only when it is actually received. Therefore, banks should not take to income account interest on non-performing assets on accrual basi....