TaxTMI 
TaxTMI 
2016 (6) TMI 1129
X X X X Extracts X X X X
X X X X Extracts X X X X
....f together. 2. There is one substantial question of law which i s common in all the appeals namely, "Whether the interest paid to members of a Co-operative Bank above Rs. 10,000/- should be added to tax or not? The point is squarely covered by a Division Bench judgment of this Court in ITA No.100116/2014 between the Commissioner of Income Tax and another vs. The Bagalkot District Central Co-operative Bank dated 16.12.2015 wherein, with reference to a circular of the Government of India bearing No.19/2 015 in F.No.142/14/2015 TPL, it has been held as follows: "42.5 In view of this, the provisions of the section 194(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e satisfied. Reference in the said judgment is also made to CIT vs. Eastern Spinning Mills Ltd (1980) 126 ITR 686 , a decision of the Calcutta High Court, wherein in pursuance of a statutory requirement under the West Bengal Employees' Payment of Compulsory Gratuity Act, 1971, a special liability was incurred by the assessee and the provision made to meet this liability was claimed as a deduction under Section 37, and reason able amount was allowed as a deduction by the Income-tax office r. The High Court held that a prudent estimate of the liability was entitled to deduction under Section 37; the contention that gratuity is a subject covered by section 36(1) and hence deduction could be claimed only on satisfying its provisions, was not ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... One other substantial question of law framed is, "Whether interest receivable from non-performing as sets, bad and doubtful debts though the actual expression used is interest payable and not reflected in the profit and loss account, could be deducted?" In this regard, the learned counsel for the assessee has produced a judgment of this Court in Commissioner of Income-Tax and another vs. Canfin Homes Ltd. (2012) 347 ITR 38 2 (Karn) with reference to non-performing assets. The Division Bench of this Court has held as follows: "Therefore, it is clear, if an assessee adopts the mercantile system of accounting and in his accounts he shows a particular income as accruing, whether that amount is really accrued or not is liable to bring....
X X X X Extracts X X X X
X X X X Extracts X X X X
....swered against, the Revenue and in favour of the assessee." At this, the learned counsel for the revenue would submit that the decision only refers to non-performing assets and it is not evident that non-performing assets would also cover other classification of loans and advances. In this regard, the learned counsel for the assessee would point out that non-performing assets would include the other categories of substandard assets, doubtful assets, loss assets, etc., all of which would come within the purview of non-performing assets. In this regard, he would draw attention to the prudential norms for income recognition, asset classification and provisioning pertaining to advances. Volume I of 'Tannan's Banking Law and Practice in In....