2018 (6) TMI 59

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....r scrutiny and during the course of assessment proceedings the AO noted that the assessee had not shown interest income on accrual basis on NPA accounts. Thereafter, the AO proceeded to hold that interest on NPA accounts was to be taxed on an accrual basis and proceeded to add an amount of Rs. 3,31,60,915/- to the income of the assessee on this account. The AO also made an addition of Rs. 11,98,774/- on account of dividend received from HARCO Bank. The AO further made an addition of Rs. 3,00,000/- on account of disallowance of provision for Standard Assets. Another addition made by the AO was disallowance of deduction claimed of Rs. 50,00,000/- on account of Provision for Loss Assets. The AO also disallowed an amount of Rs. 1.50 lakhs on ac....

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....as to be carried out by a CA Firm recommended by NABARD and the audit fee is also prescribed by NABARD. It was further submitted that the audit fee is approximately Rs. 6,000/- per branch and since the assessee bank had 25 branches, a provision of Rs. 1.50 lakhs was made. The Ld. Authorised Representative also placed reliance on the findings of the Ld. CIT (A) in this regard. 5. We have heard the rival submissions and have also perused the material on record. As far as ground nos. 1 and 2 of the department's appeal are concerned which challenge the action of the Ld. CIT(A) in deleting the addition of Rs. 3,31,61,468/- on account of accrued interest on loans classified under 'non performing assets', it is seen that this issue is squarely co....