TaxTMI 
TaxTMI 
TaxTMI 
2021 (2) TMI 20
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....T passed under section 263 of the Income Tax Act, 1961 (hereafter called 'the Act'), dated 28.03.2016. 2. ITA Nos.3347 and 3348/Bang/2018, 2859/Bang/2017 and 2289/Bang/2019. These four appeals are with regard to quantum additions for the Assessment Years 2010-11, 2012-13, 2009-10, 2011-12 respectively. 3. ITA No.2325/2019 is with regard to levy of penalty under section 271(1)(c) of the Act for Assessment Year 2011-12. 4. Since the issue involved in all these appeals are common in nature, these appeals are heard and disposed off together for the sake of convenience. 5. The facts are that the appellant had signed a contract dt 22.06.1989 with M/s Engineering Industry Commission (EIC), Ministry of Defence, Government of Ethiopia, for supp....
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....sment Year also no interest received by the assessee and the position remained the same until the Finance Year 2012-13, when the debt settlement was agreed and the assessee received 7% of the outstanding amount as the final settlement of debt and same has been offered to tax by the assessee. There was uncertainty with regard to recovery of interest concerned as a result of precarious position of EIC. Accordingly, the CIT(A) placed reliance on the judgment of Delhi High Court in the case of CIT(A) Vs. Vasisth Chay Vyapar Ltd., 330 ITR 440 (Delhi) and he allowed the appeal of the assessee. Again, the Revenue is in appeal in all these Assessment Years. The learned DR submitted that the judgment relied on by CIT(A) in the case of Vasisth Chay V....
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....by many creditors. These circumstances, led to an uncertainty insofar as recovery of interest was concerned, as a result of the aforesaid precarious financial position of Shaw Wallace. What to talk of interest, even the principal amount itself had become doubtful to recover. In this scenario it was legitimate move to infer that interest income thereupon has not "accrued". We are in agreement with the submission of Mr. Vohra on this count, supported by various decisions of different High Courts including this court which has already been referred to above. (2) In the instant case, the assessee company being NBFC is governed by the provisions of RBI Act. In such a case, interest income cannot be said to have accrued to the assessee having....
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....n of taxable income. These Directions cannot overrule the "permissible deductions" or "their exclusion" under the Income-tax Act. The inconsistency between these Directions and Companies Act is only in the matter of Income Recognition and presentation of Financial Statements. The Accounting Policies adopted by an NBFC cannot determine the taxable income. It is well settled that the Accounting Policies followed by a company can be changed unless the Assessing Officer comes to the conclusion that such change would result in understatement of profits. However, here is the case where the Assessing Officer has to follow the RBI Directions 1998 in view of section 45Q of the RBI Act. Hence, as far as Income Recognition is concerned, section 145 of....
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....ct to the provisions of the Act. Therefore, if by the Explanation to section 36(1)(vii) a provision for doubtful debt is kept out of the ambit of bad debt which is written off, then one has to take into account the Explanation in computing the total income under the Income-tax Act failing which one cannot ascertain the real profits. The provision for non-performing assets debited in the profit and loss account under the Reserve Bank Directions of 1998 is only a notional expense and, therefore, there would be add back to that extent in the computation of total income under the Income-tax Act." 10. A plain reading the above para reveals that it is a case of Bad Debt. The facts in that case is that the assessee made provision for NPA for the ....
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....ized as income accrued till it is realized by the assessee. It is not correct to say the judgment of Delhi High Court in the case of Vasisth Chai Vyapara is not applicable. In this judgment, it considered the AS 9 along with other provisions of the Act while deleting the addition. We find no merit in the argument of DR that that judgment is not applicable. Accordingly, we do not find any infirmity in the order of CIT(A) in allowing the appeal of the assessee on this issue. Accordingly, we uphold the orders of CIT(A) in ITA No.2859/Bang/2017, 3347, 3348/Bang/2018, 2289/Bang/2019. 11. ITA No.2325/Bang/2019 This appeal is with regard to deletion of penalty levied by AO under section 271(1)(c) of the Act deleted by CIT(A). Since we have uphel....