TaxTMI 
TaxTMI 
2020 (10) TMI 33
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.... in deleting the addition made in respect of interest income accrued on non-performing the assets. 3. The assessee is in appeal assailing the decision of Ld. CIT(A) in sustaining additions relating to interest income accrued on standard assets, disallowance made u/s 40(a)(ia) of the Act and disallowance made u/s 37(2B) of the Act. 4. The facts relating to the case are stated in brief. The assessee is a co-operative bank carrying on banking business. The A.O. noticed that the assessee is following hybrid system of accounting, viz., cash system for accounting interest income on loans given by it and mercantile system for all other items. In view of the same, the assessee did not account for interest accrued on standard asset and non-per....
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....ITR 382 that the interest from nonperforming assets is not assessable as income. Following the same, the Ld. CIT(A) deleted the addition of interest income relating to NPA assets. The Ld. CIT(A), however, confirmed that the addition of interest income accrued on standard assets disallowance made u/s 40(a)(ia) of the Act and u/s 37(2B) of the Act. 8. Aggrieved, both the parties are in appeal before us challenging the decision rendered by Ld. CIT(A) against each of them. 9. We shall first take up the appeal filed by the revenue. The Ld. A.R. submitted that the A.O. had made identical addition in respect of income accrued on non-performing assets in assessment years 2009-10 and 2010-11 also. The coordinate bench of ITAT, vide its order d....
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.... Thus addition to the extent of Rs. 27,32,000 was sustained by the CIT (Appeals). We are of the view that there is no basis for reclassification of NPAs into highly sticky and sticky loans once the assessee has treated the loan in the category of ITA No.1522, 1523,1548 & 1549/Bang/2016 NPAs as per the RBI Guidelines then the interest on these NPAs cannot be treated as income of the assessee. We further note that for the Assessment Year 2010-11 the CIT (Appeals) allowed full claim of the assessee without any reclassification. The Hon'ble High Court reiterated its view in case of CIT Vs. Shri Siddeshwar Co-op Bank Ltd. (supra) in para 5 as under : 5. One other substantial question of law framed is, "Whether interest receiv....
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.... any revenue. When it is not yielding any revenue, the question of showing that revenue and paying tax would not arise. As is clear from the policy guidelines issued by the National Housing Bank, the income from non-performing asset should be recognised only when it is actually received. That is what the Tribunal held in the instant case. Therefore, the contention of the Revenue that in respect of non- performing assets even though it does not yield any income as the assessee has adopted a mercantile system of accounting, he has to pay tax on the revenue which has accrued notionally is without any basis. In that view of the matter, the second substantial question framed is answered against the Revenue and in favour of the assessee.....
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..../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....
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.... followed the decision rendered by the Karnataka High Court in the case of Canfin Homes Ltd. (supra) in deciding this issue in favour of the assessee. Accordingly, we do not find any infirmity in the order passed by Ld. CIT(A) on this issue. 13. We shall now take up the appeal filed by the assessee. At the time of hearing, the Ld. A.R. submitted that the assessee has opted for settlement of the dispute under Vivad Se Vishwas Act, 2020 and has filed applications in Form 1 and 2. Accordingly he prayed that the assessee's appeal may be kept pending. 14. The Ld. D.R. submitted that the appeal of the assessee may be dismissed, since no purpose would be served in keeping the appeal pending as the assessee, in any way, required to withdraw t....