TaxTMI 
TaxTMI 
2019 (3) TMI 740
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....holding that interest on non-performing assets is taxable on accrual basis looking to the guidelines of the Reserve Bank of India?" Relevant facts giving rise to the substantial question of law is delineated by Tribunal. The assessment year is 2009-10. The appellant is a non-banking institution engaged in providing financial assistance to its customers. The appellant (referred as Assessee) filed return of income on 29-09-2009 declaring total loss of Rs. 4,35,21,572/-. The case was selected for scrutiny. Notices were issued under Section 143(2) and Section 142(1) of 1961 Act. Detail questionnaire was issued. On examination of computation of Profit and Loss account for the financial year 2008-2009 it was revealed that the assessee has mad....
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.... Byaz Kosh) and not as provision. Further this interest has not been written of in the books of account by appellant. Any amount which is not written of as 'bad debt' and not covered by the provisions of section 36 (1) (viia) is not admissible as deduction. Therefore, the claim of the appellant of Rs. 1,94,00,000/- is disallowable. Accordingly, the appeal of the appellant is dismissed on this issue." The Tribunal affirmed the disallowance holding that under the Act of 1960, the provisions could be made in accounts for an accrued or known liability which may qualify for deduction and there is no other provision to qualify for deduction. The Tribunal found that in respect of penal interest in a sum of Rs. 1.94 Crores, the assessee h....
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....ecision in Shri Mahila Sewa Sahakari Bank Ltd (supra) was subjected to challenge before the Supreme Court in Principal Commissioner of Income Tax 5 Ahemdabad Vs. Mahila Sahakari Bank Ltd. (Civil Appeal No.8977/2017) by the Revenue, which was dismissed on 13/12/2017. Similarly, the decision in Vasisth Chay Vyapar Ltd (supra) wherein it was held "the assess being an NBFC was governed by the provisions of the RBI Act. In such a case, interest income could not be said to have accrued to the assessee having regard to the provisions of section 45Q of the RBI Act and Prudential Norms issued by the RBI in exercise of its statutory powers. As per these Norms, the ICDs had become NPA and on such NPA where the interest was not received and possibilit....
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.... Sahakari Bank Ltd., (supra) and dismissed the Revenue's appeal. Once again, the issue was carried to the Supreme Court by the Revenue. The Appeal was dismissed by an order dated 28th April, 2018. 6 Identical issue was also examined by the Punjanb & Haryana High Court in case of Pr. CIT v/s. Ludhiana Central Coop. Bank Ltd., reported in 410 ITR 72. The decision of the Gujarat High Court in Shri Mahila Sewa Sahakari Bank Ltd., (supra) was cited before the Court. The Court noted that appeal against such judgment of the High Court, was dismissed by the Supreme Court. The Court concluded as under: "Adverting to the factual matrix, it may be noticed that the Tribunal while relying upon the various pronouncements had decided the issue r....