2021 (8) TMI 225

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....einafter referred to as 'the tribunal' for short). The subject matter of the appeal pertains to the Assessment year 2010-11. The appeal was admitted by a bench of this Court on the following substantial questions of law: "(i) Whether the Tribunal was justified in law in not allowing deduction of Rs. 6,30,553/- under section 36(1)(viii) of the Act being profits derived from eligible business on the facts and circumstances of the case. (ii) Whether the Tribunal was justified in law in not deleting the income of Rs. 1,89,01,179/- being alleged accrued interest income on non-performing assets on the facts and circumstances of the case. (iii) Whether the Tribunal was justified in law in not following the bindin....

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....ction 36(1)(viii) of the Act. It is further submitted that assessee is a specified entity as provided in sub Clause (iv) of Clause (a) to Explanation to Section 36(1)(viii) and development of housing in India is an eligible business by virtue of sub Clause c of Clause (b) to Explanation to Section 36(1)(viii) of the Act. It is also urged that Section 36(1)(viii) is a beneficial provision and has to be liberally construed. It is also submitted that assessee being a co-operative bank is entitled to deduction of 20% of the profits arising out of long term finance, which is provided for development of housing in India. It is also submitted that interest pertaining to Non-Performing Assets (NPA) cannot be recognized as income till it is actually....

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....ness in respect of specified entity. Specified Entity means a business of providing long term finance for construction of purchase of houses in India for residential purpose. Thus, in case of an assessee the assessee is required to fulfill the condition of having engaged in the business of providing long term finance for construction or purchase of houses in India for residential purpose. The aforesaid aspect of the matter has not been examined by the tribunal while dealing with the claim of the assessee for deduction under Section 36(1)(viii) of the Act. 7. The assessee had classified certain advances as Non Performing Asset in accordance with the directives issued by the Reserve Bank of India. The income by way of interest in respect o....