2019 (8) TMI 648

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....ng total income at Rs. NIL on 13.10.2015. The case of the assessee was subject to scrutiny and notice under Sec. 143(2) of the Act was issued on 01.08.2016. The assessee was engaged in the banking business, however, no banking activities was carried out during the year under consideration as the assessee bank was in the liquidation. Further facts of the case are discussed while adjudicating the ground of appeal filed by the assessee as under:- "1. The Assessing Officer and Ld. CIT(A), Baroda both have erred in law in considering income of interest received on advances Rs. 9,88,,259/- as "Income from other sources" instead of business income as shown by the assessee in the return of income. 2. The Assessing Officer and Ld.C....

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....ing to the provisions of Sec. 176(3A) of the Income Tax Act. The AO has not agreed with the submission of the assessee and stated that on similar facts and circumstances in the assessee's own case for A.Y. 2009-10 the AO has treated similar income (i.e. interest on advance and interest from banks) as income from other sources. 4. The aggrieved assessee has filed appeal before the Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal. We have heard the rival contention on this issue. The assessee has claimed the interest income of Rs. 9,88,259/- pertaining to the amount received from the borrower against its outstanding balance. In this regard, we have perused the provision of Sec. 176(3A) of the Act. The relevant part of this provision ....

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....to the fixed deposit made with Sarvoday Co-operative Bank Ltd., Ahmedabad. Since the Sarvoday Co-operative Bank was under liquidation and there was no probability of recovering the said fixed deposit amount from the bank, therefore, the impugned amount had been written off as bad debts. The AO has not agreed with the submission of the assessee. The AO was of the view that assessee's banking licence for carrying on banking business in India was cancelled under Sec. 22 of the Banking Regulation Act, 1949 by the Reserve Bank of India on 25th October, 2015, therefore, the assessee was not entitled to claim bad debt. 7. The aggrieved assessee has filed appeal before the Ld. CIT(A). Ld. CIT(A) has dismissed the appeal of the assessee. We ha....