TaxTMI 
TaxTMI 
2017 (9) TMI 1897
X X X X Extracts X X X X
X X X X Extracts X X X X
....A). 3. The CIT (Appeal) erred in coming to the conclusion that the assessee can follow received system of accounting. 4. The CIT (Appeal) failed to appreciate the rationale of decision in the case of Hon'ble Supreme Court of India in Southern Technologies Ltd., Vs. JCIT (2010) 320 ITR 57, RBI Guidelines are only prudential norms and cannot overrule income reconfirms as per Income-tax Act. 5. The CIT (Appeal) is not right in granting relief to the assessee admitting the evidences produced by the assessee in support of claim of deduction U/s 36(1)(viia) towards deduction made to rural branches, without granting opportunity to the AO for verification. 6. For these and other grounds that may be urged upon, the order of the CIT Appeal) may be reversed and that assessment order be restored. 7. The appellant craves leave to add, alter, amend or delete any other grounds or on before hearing of the appeal. 3. Ground No.1 is general in nature and do not require any specific adjudication. 4. Ground Nos.2 to 4 are regarding addition made on account of interest accrued on Non-Performing Assets (NPAs). The assessee is a district central co-opera....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l debts though the actual expression used is interest payable and not reflected in the profit and loss account, could be deducted?" In this regard, the learned counsel for the assessee has produced a judgment of this Court in CIT v. Canfin Homes Ltd. [2012] 347 ITR 382/[2011] 201 Taxman 273/13 taxmann.com 43 with reference to non-performing assets. The Division Bench of this Court has held as follows: "Therefore, it is clear, if an assessee adopts the mercantile system of accounting and in his accounts he shows a particular income as accruing, whether that amount is really accrued or not is liable to bring the said income to tax. His accounts should reflect true and correct statement of affairs. Merely because the said amount accrued was not realised immediately cannot be a ground to avoid payment of tax. But, if in his account it is clearly stated though a particular income is due to him but it is not possible to recover the same, then it cannot be said to have been accrued and the said amount cannot be brought to tax. In the instant case, we are concerned with a non-performing asset. As the definition of non-performing asset shows an asset becomes non-performing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oan or an advance where: (i) the interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan; (ii) the account remains "out of order" for a period of more than 90 days as indicated below, in respect of an Overdraft/Cash Credit (OD/CC); (iii) the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted; (iv) the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops; (v) the instalment of principal or interest thereon remains overdue for one crop seasons for long duration crops. Banks should, classify an account as NPA only if the interest charged during any quarter is not serviced fully within 90 days from the end of the quarter.' Further, asset classification which is separately dealt with reference to categories of non-performing assets, as follows: "Banks are required to classify non-performing assets further into the following three categories based on the period for which the asset has remained nonperforming and the realisability of the dues: (a)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and, the learned Authorised Representative has submitted that all the details were available before the Assessing Officer and CIT (Appeals) has taken the figure from the record available. Therefore when no additional evidence was filed by the assessee then the decision of the CIT (Appeals) based on the material available on assessment record cannot be challenged on these grounds. He has further submitted that the assessee filed the branch-wise details before the CIT (Appeals) at page Nos.11 & 12 of the paper book. 9. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer disallowed the claim of the assessee that the provisions for bad and doubtful debt is not an allowable claim and further the assessee did not file the relevant details to examine whether the claim of the assessee is within the permissible limit of 10% of aggregate average advances by the rural branches. The CIT (Appeals) has partly allowed the claim of the assessee after considering the details of the advances of the rural branches as filed by the assessee and placed at pages 11 & 12 of the paper book. Accordingly, in the facts and circumstances of the case whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....009-10. 17. Ground No.5 is an extra ground for the Assessment Year 2010-11 which reads as under : "5. The CIT (Appeals) is not right in holding that the interest receivable from Government is a capital receipts towards debt waiver ?" 18. The Assessing Officer noted that the interest receivable from the Govt. Loan Waiver Scheme is shown in the balance sheet at Rs. 15,39,900 for the year ending 31.03.2010. However, the same has not been credited to the profit and loss account. Accordingly, the Assessing Officer proposed to add back the said interest receivable from the Government to the income of the assessee. The assessee explained before the Assessing Officer that it has shown a sum of Rs. 53.99 lakhs being principle and interest receivable from the Govt. of India on account of Waiver of Loan pertaining to the Primary Agriculture Co-operative Societies which were asked to prepare the Loan Waiver Bill and submit the same through District Co-operative Central Bank for reimbursement. Therefore the said amount to be released from the Central Government pertaining to the Primary Agriculture Co-operative Societies and the assessee is only an intermediary for receiving the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ary Agriculture Co-operative Societies and disbursement of the amount of loan waiver under the scheme of Govt. of India. Accordingly, we do not find any error or illegality in the impugned order of the CIT (Appeals) qua this issue. 21. For the Assessment Year 2010-11, the assessee raised only one Ground i.e. Ground No.2 as under : "2. The learned CIT (Appeals) is not justified in sustaining a sum of Rs. 3,74,715 being the provision for contingent liability, which is factually a provision for bad debts only under the facts and in the circumstances of the appellant's case." 22. This ground is common to the Assessment Year 2009-10. The learned Authorised Representative has submitted that initially the assessee claimed as provision on standard asset however subsequently the assessee claimed the deduction of this amount under Section 36(1)(vii) as provision for bad and doubtful debts. The learned Authorised Representative has further submitted tht when the claimed of the assessee is within the allowable limit of 10% of aggregate average rural advances then the same cannot be disallowed by treating it as a contingent liability. He has relied upon the decision of Hon'bl....