2018 (4) TMI 93

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....s passed by the Income Tax 3 Appellate Tribunal, Bengaluru ['the Tribunal'] in I TA. No.790/Bang/2016 (relating to the Assessment Year 2010- 2011). The relevant background aspects of the matter are that the respondent-assessee is said to be a Co-operative Society, engaged in banking business. For the assessment year in question, the Assessing Officer proceeded to make addition in respect of interest on non-performing assets (NPAs). However, in appeal by the assessee, the Commissioner of Income Tax (Appeals), Davangere ['the CIT(A)'] deleted such addition by following the decision of this Court in the case of COMMISSIONER OF INCOME TAX AND ANOTHER v. CANFIN HOMES LTD. : [2012] 347 ITR 382 (Karnataka). Aggrieved, the Revenue preferred the a....

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....f accounting was not permissible. Having heard learned counsel for the appellants and having perused the material placed on record, we are satisfied that the suggested question of law does not arise in this case, as the matter stands concluded in this Court in view of the decision in Canfin Homes Ltd. (supra). Therein, this Court has specifically held that income from N PA should be assessed on cash basis and not on mercantile bas is, despite the assessee following mercantile system of accounting. This Court has, with reference to the decisions of the Hon'ble Supreme Court in STATE BANK OF TRAVANCORE v. C.I.T.: [1986] 158 ITR 102 (SC) and UCO BANK v. C.I.T.: [1999] 237 ITR 889 (SC), held as under: "8. Therefore, it is clear, if an assesse....