TaxTMI 
TaxTMI 
2023 (10) TMI 1129
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....on-Performing Assets was part of income subjected to tax as the assessee failed to furnish details of assets on which interest was not received by it and categorized by it as NPA. (ii) The CIT(A) erred in not appreciating that the CBDT Circular No F. NO. 201/21/84-ITA-II, DATED 9-10-1984 provided that interest in respect of doubtful debts credited to suspense account by the Banking Companies will be subject to tax but interest charged in an account where there has been no recovery for three consecutive accounting years will not be subjected to tax in the fourth year and onwards and that the assessee failed to establish that there was no recovery for a continuous period of three years and that, therefore, interest shown as receivable by the assessee was taxable income of the assessee for the year under consideration." I.T.A. No.354/Asr/2018 3. The assessee has taken the following grounds: "1. That the Ld. CIT (Appeals) erred in law and on facts in not deleting the addition of Rs. 60,22,615/- on account of interest recoverable as on 31/03/2014 which related to the F.Y. 2010-11 and F.Y. 2011-12 and the same was already offered to tax as interest income for thos....
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....ofit & loss a/c for the year ended 31/03/2014 and the assessee claimed net deduction for Rs. 85,11,141/- in the ITR consequent upon MOC by the statutory auditors. During the appellate proceedings, the assessee submitted details related to claiming deduction for Rs. 85,11,141/- but the same was ignored by the Ld. CIT(A) mainly for the reason that the assessee has not submitted formal application under Rule-46 A of Income-tax Rules, 1962 for admission of additional evidence and confirmed the additions made by the assessing officer. ii) That the appellant has submitted the details of the net deduction for Rs. 85,11,141/- at Page No. 39 to 44 of the Paper Book filed with this Hon'ble Tribunal and a copy of these details are again submitted for admission of additional evidence from Page No. 3 to 8. iii) That the appellant prays that the additional evidence now been submitted would have material bearing on the issue which needs to be decided by this Hon'ble Tribunal and ends of justice demands admission of such evidence for proper adjudication of the matter. The appellant was prevented by sufficient cause to lead such evidence before the assessing officer/Ld. CIT(A) as ....
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....our attention in submission related to support of his claim which is extracted as below: - "1. That the Respondent-Assessee is a Co-operative Bank incorporated as a Co-operative Society and is engaged in the business of banking. The grievance of the Revenue is that the Ld. CIT(A) has erred in allowing relief amounting to Rs. 5,64,17,644/- related to interest receivable on Non-Performing Assets. 2. That by following RBI guidelines in respect of accounting of interest on NPA's as per Prudential Norms of Recognition of Income and Asset Classification and following Accounting Standard-9 (AS-9) on Revenue Recognition as prescribed by the Institute of Chartered Accountants of India, the assessee has not considered accrued interest as income. In accordance with the said Accounting Standard, where there is an uncertainty about the collection of revenue, recognition of income or such revenue is postponed to the extent of uncertainty involved. In such cases, recognition of revenue shall be made on only receipt basis or only when it is reasonably certain that the ultimate collection will be made. In view of AS-9, the co-operative bank recognized revenue (interest income) on ....
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....urthala Central Co-operative Bank Ltd. respectively and decision dated 03/01/2017 of ITAT, Chandigarh in ITA No. 526/Chd/2013 in the case of The Ludhiana Central Co-operative Bank Ltd., dismissed the Revenue's Appeal. The Copy of the above order dated 04/10/2017 in the case of The Moga Central Co-operative Bank is enclosed at Page No. 15 to 25 in the accompanying Paper Book. 6. That aggrieved by the order dated 03/01/2017 of ITAT, Chandigarh in the case of Ludhiana Central Co-operative Bank (supra), the Revenue preferred appeal before the Hon'ble Punjab & Haryana High Court and the High Court dismissed the Revenue's Appeal in the matter by concluding at Para-32 of its order that interest on NPA's is taxable in the year of receipt and confirmed the findings recorded by the Hon'ble Chandigarh Tribunal in the matter. The Hon'ble High Court at Para-30 (Page No. 30) of the judgement observed that- "Therefore, notwithstanding the provisions of section 43 D of the Act, since the provisions of section 45Q of the 1934 Act have an overriding effect vis-a-vis income recognition principles in the Companies Act, the Assessing Officer is bound to follow the RBI Directions so fa....
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....sessee. Ground No. 2 11. The ld. AR submitted the additional evidence under Rule 29 related to adjustment income and expenses were made through memorandum of charges (MOC) by the statutory auditor and the ITR for A.Y. 2014-15 was filed on basis of the information contained in audit balance sheet and profit and loss account for the year 31.03.2014 and the assessee claimed no deduction for Rs.85,11,141/- in the ITR consequent upon MOC of statutory auditor. After details discussion the additional ground of assessee is accepted, and the ld. DR had not made any objection against the acceptance of additional ground. During appeal proceeding the assessee submitted details related to claim of deduction Rs. 85,11,141/- but the ld. CIT(A) had not adjudicated as the reason that the assessee has not submitted formal application under Rule 46-A of the Income Tax Rules, 1962 for admission of additional evidence and accordingly confirmed the additions made by the ld. AO. The ld.AR placed the additional evidence under Rule 29 of ITAT Rule and prayed for acceptance. The ld. DR had not made any strong objection against this additional evidence of the assessee. Accordingly, the additional evide....