TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 1063
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....ces of the case the Ld. Commissioner of Income Tax Appeals is not justified in not following the Judgment of the Hon'ble Jurisdictional High Court of Himachal Pradesh whereby the Hon'ble High Court held that the interest on sticky loans (NPAs) in respect of co-operative bank is taxable on receipt basis viz-a-viz NPAs and hold that the amendment in Section 43D w.e.f. 01.04.2018 should be treated as retrospective." 3. Briefly the facts of the case are that the assessee is a Co-operative Society registered under the Co-operative Societies Act w.e.f. 07.09.1970 and thereafter got under the purview of Banking Regulation Act, 1949 w.e.f. 27.03.1972 by the Reserve Bank of India and permanently registered under RBI License dated 09.05.1997 and therefore, covered under Non Scheduled Bank as defined in the Banking Regulation Act, 1949. The assessee was following mercantile system of accounting for the impugned assessment year. The assessee had filed its return of income declaring total income of Rs. 1,83,15,554/- and in the assessment frame d u/s 143(3), an addition was made to the total income on account of overdue interest on non performing assets amounting to Rs. 49,52,913/- whi....
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....d on the accounts which were declared NPA. In that regard, it was submitted that the assessee is a Cooperative Bank engaged in the business of banking. In the assessment year under consideration, the ld. A.O. was of the opinion that interest on the loans which have been declared NPA had to be declared as income of the assessee on accrual basis as the assessee-bank was following mercantile system of account. In that regard, it was submitted that the assessee is Co-operative bank engaged in the business of banking and the NPA had been declared as per the prevalent RBI's guidelines which are binding upon the assessee. The status of the accounts which were declared NPA alongwith the prevalent RR1 guidelines for the instant assessment year were placed on record. It was further submitted that the matter is no longer res integra as the law is well settled by the Hon'ble Supreme Court of India in the case titled UCO Bank versus CIT reported in 237 ITR 889 and Mercantile Bank Ltd reported in 283 ITR 84. It was submitted that as the issue is squarely covered in the favour of the assessee, it was prayed that the addition be quashed. Alternatively, it was submitted that the Section 43 ....
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....td. in Civil Appeal No. 5065 of 2008, it was held by the ld. CIT(A) that the retrospective application can be achieved by express enactment or by necessary implication from the language implied and in the present case, in his opinion with due respect and offering due apology to the Hon'ble Judges, the amendment in Section 43D w.e.f. 01.04.2018 should not be treated as retrospective in nature. Further, he agrees with the observation of the AO that the judgement of the Hon'ble Supreme Court in case of UCO Bank is not applicable in the present case as the assessee is a Co-operative Society (bank) and not a Scheduled Bank, hence the assessee society cannot be given the benefit of retrospectivity of Section 43D nor the benefit of a Schedule Bank and the appeal of the assessee was accordingly, dismissed. 6. Against the said findings and the directions of the ld. CIT(A), the assessee is in appeal before us. 7. During the course of hearing, the limited contention which has been raised by the ld. AR is that the amendment brought in Section 43D was curative in nature to provide level playing fields to the co-operative banks vis-à-vis Scheduled Bank and to rationalize the sco....
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....rently pending adjudication before the Hon'ble Supreme Court. It was, accordingly, submitted that the Revenue has not accepted the decision of the Hon'ble jurisdictional High Court in case of Kangra Central Co-operative Bank. 11. We have heard the rival contentions and perused the material available on record. In case of Kangra Central Co- operative Bank (supra), the matter came up for consideration before the Hon'ble jurisdictional High Court pertaining to assessment year 2012-13 and 2013-14 and the Hon'ble jurisdiction High Court was pleased to hold as under : "21. A perusal of the objects of amending the existing provisions of Section 43D of the Act vide Finance Bill 2017, reveals that the benefit of the existing provision was available to scheduled bank or a public financial institution etc. With a view to provide level playing field to cooperative banks vis-a-vis scheduled banks and to rationalize the scope of Section 43D. it was proposed to introduce the amendment to Section 43D of the Act so as to include co- operative banks other then a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The omission was ....