TaxTMI 
TaxTMI 
2019 (3) TMI 1853
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....come of public financial institutions or a scheduled bank or a state financial corporation or a state industrial investment corporation, public companies etc. It was noticed that the assessee does not belong to any of these categories mentioned above. However, this was allowed by the Assessing Officer which is erroneous and prejudicial to the interest of revenue. Before the CIT, the Ld. AR relied on decisions rendered in the cases of Allied Motors P. Ltd., vs.CIT (1997) 139 CTR 0364(SC); CIT vs.Chandulal Venichand (1994) 209 ITR 7(Guj) and CIT vs. Sri Jagannath Steel Corporation (1991) 191 ITR 676(Cal.). The Ld. AR also stated that section 43D(a) was amended by the Finance Act, 2017 where co.op. banks have also been included for this deduction u/s.43D with effect from 01.04.2018. The CIT was of the view that the legislature had made it amply clear by stating that the provisions are retrospective. Therefore, considering the fact that this deduction is available only from 01.04.2018 as per the amendment, the CIT held that the Assessing Officer's action in allowing deduction was both erroneous and prejudicial to the interest of revenue. Hence the assessment was set aside with a di....
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.... Co-op. Bank vs. Department of Income Tax (ITA No.1530/Bang/2013 dated 05/03/2015) (ITAT, Bangalore) 3. Dy. CIT vs. The Saurashtra Co-op. Bank Ltd. (ITA No. 690/Ahd/2016 dated 31/01/2018 (ITAT, Ahmedabad) 4. Dy. CIT vs. Gondal Nagarik Sahakari Bank (ITA No. 504/Rjt/2015 dated 16/01/2018 (ITAT, Rajkot) 4. The Ld. DR relied on the order of the CIT. 5. We have heard the rival submissions and perused the record. In this case, the main contention of the Ld. AR is that the assessee is a Co-operative Bank and provisions of section 43D(g) is applicable and the assessee is entitled for deduction of interest on sticky loans. The provisions of section 43D(g) was inserted by Finance Act, 2017 which is clarificatory and should be applied. As such, it was submitted that the assessee cannot be denied the applicability of provisions of section 43D(g) of the Act. An identical issue was considered by Ahmedabad Bench of the Tribunal in the case of Karnavati Co-op. Bank Ltd. vs. DCIT (2012) (134 ITD 486) wherein it was held that interest on sticky advances/NPA advances cannot be brought to tax. The provisions of section 43D are applicable to Co-operative Banks also. The relevan....
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....nd banks, the CBDT has issued a Circular dt. 6th Oct., 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, it need not be included in assessee's taxable income, provided the ITO is satisfied that recovery is practically improbable. The CBDT under s.119 has power to issue circulars in exercise of its statutory powers. If the Board considers it necessary to lay down certain rules and then direct the sub-ordinate authorities, such directions are required to be followed and such circular would be binding on the Department unless and until held as ultra vires by a Court of law. The Board has powers to relax the severity or the strictness of law and the authorities are required to follow those instructions. As of now the law as laid down is that in terms of CBDT circular the interest is to be added as income only when actually received or credited in respect of the "sticky advances" while making assessment for a financial institution. It can safely be concluded that by the insertion of a special provision to tax interest income in the case of public financial institution, etc. s. 43D has to be applied in its letter and spirit." 5.1 Thi....
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....ations established under section 3 or 3A of the State Financial Corporations Act, 1951 and institutions notified under section 46 of the said Act, and State industrial investment corporations which are Government companies as per section 617 of the Companies Act, 1956 and which are engaged in providing long term finance for industrial projects and approved by the Central Government under Sec.36(i)(viii) of the Act. As per section 43D in the cases of above said institutions interest on sticky advances falling under Health Codes 4 to 8 as per the guidelines issued by the Reserve Bank of India will be charged to tax either in the year in which the relevant interest is credited to the profit and loss account or the year of actual receipt of interest, whichever is earlier. Thus, so long as the interest is not received and so long as credits in respect of such interest are confined to "interest suspense account", such interest amounts will not be treated as income of the assessee in view of the non- obstante clause of section 430 even though the assessee is following mercantile system of accounting." 5.1 Reliance is also placed on the decision of the Karnataka High Court in the case o....