TaxTMI 
TaxTMI 
2017 (7) TMI 1418
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....composite order. For the sake of brevity and convenience, the grounds of appeal in ITA No.98(Asr)/2017 has been taken into consideration for decision of the same. "1. That on the facts and in the circumstances of the case Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,12,27,702/- made by the AO holding that the interest due on 'Non-Performing Assets' was taxable as the Co-op Bank was following mercantile system of Accounting except with regard to the interest pertaining to NPAs. 2. The Ld. CIT(A) has erred in relying on his decision in the case of M/s Jalandhar Central Co-op Bank Ltd. in Appeal No. 66/14-15/CIT(A)/Jal. Dated 19.09.2016 for the A.Y. 2012-13 as the revenue has filed appeal against the said order....
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....ssee is following mercantile system of accountings. While considering the documents submitted by the assessee and relevant provisions of law relevant to the instant case and judgments relied by the parties, the Assessing Officer determined the liability in respect of NPA interest as under: "Moreover assessee's contention is also not acceptable as the RBI Directions or [Directions by the Apex Bank {The Punjab State Co-operative Bank Ltd.}] do not have any relevance to the treatment of taxable income, for the RBI Act and the Income Tax Act operate in different fields. The RBI Act overrides the Companies Act, 1956 to the extent of presentation of accounts, but does not override the Income Tax Act, 1961." Further, in the light of the judgme....
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....4.3 I have gone through the assessment order passed by the AO and detailed submissions filed by the appellant including judicial citations given therein and find that an addition of Rs.1,12,27,702/- has been made by the AO on account of interest on non performing assets (NPA). It has been noted by the AO in the course of assessment proceedings from the audit report filed along with the return of income that NPAs of Rs.9,51,62,527/- have been shown in the balance sheet as on 31.03.2012 and following the mercantile system of accounting, no interest income has been declared on these NPAs. Considering the explanation filed by the appellant with regard to the circulars of RBI etc. the AO has held that interest income of Rs.1,12,27,702 has not be....
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....k Ltd. in the preceding year AY 2011-12 and after considering, the jurisprudence on this issue was held that it has to be taxed in the year of actual receipt . Therefore, following the same decision as there is no change in the facts of the ease in the year, I delete the addition of Rs.2,03, 76,946 made by the AO on account of accrued interest on NPAs" 4.6 Therefore, in view of the above facts, as the issue in this cae is same, I delete the addition of Rs.1,12,27,702 made by the AO on account of interest on non performing assets (NPA) after placing reliance on the same order." 6. The Ld. DR in support of its case argued that he is relying upon the assessment order passed by the Assessing Officer. 7. On the other hand, the Ld. Counsel fo....
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....ly controversy pertains to deletion of the addition qua interest due on non-performing assets as not taxable and the interest on non - performing assets is to be taxed in the year of actual receipt even though it is following mercantile system of accounting. The Coordination Bench of the ITAT, while deciding the similar issue observed as under: "6. It remains an undisputed fact that the assessee co-ordination bank has been following the mercantile system of accounting, except with regard to interest pertaining to NPAs. As noted by the Ld. CIT(A), this position stands accepted by the department in the earlier years. The assessee has been following the RBI guidelines in this matter. Its method of accounting is entirely in accordance with th....
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.... detailed order, requiring no interference whatsoever at our hands. The same is, accordingly, confirmed. 10. As noted at the beginning of this order, all the three appeals involve the same common issue. That being so, our above observations shall apply equally, mutatis mutandis, to the other two appeals also. 11.Accordingly, all the orders of the Id. CIT(A) in these three appeals are upheld and the grounds raised by the department are rejected" While following the aforesaid judgment of the Co-ordination Bench, even otherwise we independently considered the facts of the instant case that the assessee is a Co-operative Society which is engaged in the business of banking and has been following the directions of the Apex Bank and according....