TaxTMI 
TaxTMI 
2019 (7) TMI 1152
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....l Chennai Bench 'D' (for brevity, "the Tribunal"), in I.T.A.No.1595/Mds/2008, for the assessment year 2004-05. 2.The above appeal has been admitted, on 30.11.2009, on the following substantial question law:- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming inclusion of the interest income on 'non-performing assets' in the light of applicability of Accounting Standards AS9 read with Government Notification on Accounting Standards SO 69 dated 25.01.1996 in pursuance of Section 145(2) of the Income-tax Act?" 3.The assessee is a non-banking financial company stated to be in existence for over 100 years. For the assessment year under consideration, 2004-05, the assessee filed i....
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....14.05.2008, in which, the CIT(A) relied upon the decision in the case of CIT vs. India Equipment Leasing Ltd., reported in (2007) 293 ITR 0350. 7.To be noted that the said decision pertains to an assessment for the year 1994-95. The circulars issued by the Reserve Bank of India in exercise of power conferred under Section 45JA of the Reserve Bank of India Act, 1934, have been revised/superseded from time to time. At the relevant point of time, the circular which was taken note of by the Division Bench in India Equipment Leasing Ltd. (supra) was not issued by the Reserve Bank of India, but by the Central Board of Direct Taxes (CBDT) in circular dated 09.10.1984, and the said circular stated that interest on self-performing assets is to be e....
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....le to the same borrower/beneficiary when any of the above credit facilities becomes non-performing asset." 10.So far as "income recognition" is concerned, the said circular states as hereunder:- "Income recognition 3. (1) The income recognition shall be based on recognised accounting principles. (2) Income including interest/discount or any other charges on NPA shall be recognised only when it is actually realised. Any such income recognised before the asset became non-performing and remaining unrealised shall be reversed. (Effective from May 12, 1998) (3) .............. (4) .............." 11.The circular of the CBDT, which was referred to in India Equipment Leasing Ltd. (supra) no doubt stipulates the three years' period. ....
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....become sticky. 14.The CIT(A) in paragraph 4.1 of its order records that in the light of the decision in India Equipment Leasing Ltd. (supra), the assessee was directed to produce the list of borrowals out of the 86 borrowers in whose case, there has not been any movement in their respective accounts during the period 01.04.2000 to 31.03.2003. Based on the stand taken by the assessee, the CIT(A) states that there is no such borrower in whose case neither principal, nor the interest has been received by the assessee in the past three years and therefore, the CIT(A) concluded that the assessee does not have sticky loan accounts. However, what is required to be done is to examine whether within the previous year or relevant to the assessment ....
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....01 were not in vogue. That apart, the decision also does not consider the effect of revenue recognition under AS-9. Therefore, we are of the view that the decision in India Equipment Leasing Ltd. (supra), could not have been applied to the facts of the present case. 18.The Tribunal has referred to the assessee's own case for the assessment year 2003-04 passed by the CIT(A). However, the said decision has been reversed by the Tribunal by order dated 30.10.2008. The Tribunal has also referred to the decision of this Court in the case of T.N.Power Finance and Infrastructure Development Corporation Ltd. vs. JCIT T.C.Nos.1012 and 1013 of 2005, dated 26.10.2005. The said case arose out of a case arising under Section 36(1)(vii) of the Act. ....