TaxTMI 
TaxTMI 
2018 (3) TMI 146
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....lowing the order of Tribunal in assessee's own case for assessment year 2010-11 in ITA No. 1376/PN/2014 decided on 08-01-2016 deleted the addition on account of interest on NPAs. Now, the Revenue is in appeal before the Tribunal. The assessee has filed cross objections supporting the order of Commissioner of Income Tax (Appeals). 3. Shri Mukesh Jha representing the Department vehemently supported the findings of Assessing Officer in disallowing interest on NPAs. The ld. DR submitted that the provisions of Income Tax Act override RBI guidelines. In support of his submissions, the ld. DR placed reliance on the decision of Hon'ble Supreme Court of India in the case of Southern Technologies Ltd. Vs. Joint Commissioner of Income Tax reported as 320 ITR 577 and the decision of Ahmedabad Bench of Tribunal in the case of The Sarangpur Co-op. Bank Ltd. Vs. DCIT in ITA Nos. 529 & 530/Ahd/2013 decided on 21-06-2013. 4. Per contra, Shri M.K. Kulkarni appearing on behalf of the assessee submitted that the issue relating to allowability of interest on NPAs has been considered by the Co-ordinate Bench of Tribunal in assessee's own case in ITA No. 1376/PN/2014 for assessment year 2010-11 dec....
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....ky advances. In all these cases, the Assessing Officer, during the assessment proceeding has observed that the provisions of section 43D of the Income-tax Act cannot be applied to the assessee as it is not a scheduled bank but a co-operative bank. In the opinion of the Assessing Officer, considering the provisions of section 43D of the Income-tax Act, non-scheduled co-operative banks are specifically excluded from the special provisions of section 43D of the Income-tax Act, regarding interest on sticky advances. The Assessing Officer has also held that the Central Board of Direct Taxes Circular No. F. 201/ 81/84 ITA-II, dated October 9, 1984, is applicable only to banking companies and not to non -scheduled banks and co-operative banks. 4. Being aggrieved by the same, the assessee/above co-operative banks preferred appeals separately before the Commissioner of Incometax (Appeals). The Commissioner of Income-tax (Appeals), vide his orders in all the appeals has directed to delete the additions on the interest of sticky advances, on the NP A made by the Assessing Officer. 5. Being aggrieved by the order of the Commissioner of Incometax Appeals), the Revenue preferre....
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....of the decision rendered by the hon'ble Supreme Court in the case of UCO Bank v. CIT reported in [1999] 237 ITR 889 (SC) ; [1999] 4 SCC 599. 8. Learned counsel for respondent submits that the learned Tribunal has rightly dismissed the appeals of the Revenue by confirming the order passed by the Commissioner of Income-tax (Appeals). There is no substantial question of law involved in these appeals and, thus, all the appeals are liable to be dismissed. 9. The Income-tax Appellate Tribunal has referred the case of Vasisth Chay Vyapar Ltd. [2011] 330 ITR 440 (Delhi). In this case, the Revenue relied upon the decision of the hon'ble Supreme Court in the case of Southern Technologies Ltd. (supra). The learned Income-tax Appellate Tribunal has reproduced the observations made by the Delhi High Court while referring the said case of Southern Technologies Ltd. (supra). The assessee herein being a co-operative bank also governed by the Reserve Bank of India and thus the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the co-operative banks. The hon'ble Supreme Court in the case of Southern Technologies....
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.... under the Circular of October 9, 1984, will be applicable for and from the assessment year, 1979-80. All pending disputes on the issue should be settled in the light of these instructions. Therefore, up to the assessment year 1978-79, the Central Board of Direct Taxes's Circular of October 6, 1952 would be applicable; while from the assessment year 1979- 80, the Central Board of Direct Taxes's Circular of October 9, 1984 is made applicable. In the present case, the assessment was made on' the basis of the Central Board of Direct Taxes's Circular on October 9" 1984, since the assessment pertains to the assessment year 1981-82 to which the Circular of October 9, 1984, is applicable ... If, the Board has considered it necessary to lay down a general test for deciding what is a doubtful debt, and directed that all Income-tax Officer's should treat such amounts as not forming part of the income of the assessee until realized, this direction by way of a circular cannot be considered as travelling beyond the powers of the Board under section 119 of the Income-tax Act. Such a circular is binding under section 119. The Circular of October 9, 1984, therefore, provides a ....
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....ency or contradiction between the circular so issued and section 145 of the Incometax Act. In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to section 145 of the Income-tax Act or illegal in any form. It is meant for a uniform administration of law by all the Income-tax authorities in a specific situation and, therefore, validly issued under section 119 of the Income-tax Act. As such, the circular would be binding on the department . . . The relevant circulars of Central Board of Direct Taxes cannot be ignored. The question is not whether a circular can override or detract from the provisions of the Act; the question is whether the circular seeks to mitigate the rigour of a particular section for the benefit of the assessee in certain specified circumstances. So long as such a circular is in force it would be binding on the departmental authorities in view of the provisions of section 119 to ensure a uniform and proper administration and application of the Income-tax Act." 11. The learned counsel for the respondent has placed reliance....