TaxTMI 
TaxTMI 
2024 (12) TMI 977
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.... 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowances of Rs. 2,91,38,000/- without following alternatively the concept of real income provided in Board Circular No. 201/21/84 dt. 09/10/1984. 4. Any other ground which may be raised with permission of Hon'ble ITAT." 3. Fact in Brief :- The assessee is a Co-operative Bank engaged in the business of banking. The return of income has been filed on 19/09/2011, declaring total income at Rs. nil, showing the current year's loss to be carried forward at Rs. 9,17,22,792, including unabsorbed depreciation of Rs. 32,80,263. The return of income was processed under section 143(1) of the Income Tax Act, 1961 ("the Act") on 11/01/2012 and selected for scrutiny. The assessment was made on total loss of Rs. 2,44,14,471, by making addition of Rs. 2,91,38,000, on account of deduction of excess overdue provision Rs. 41,42,952/- on account of Bad-debt written-off and of Rs. 3,28,70,000, 3,28,70,000/- on account of excess NPA provision. Being aggrieved the assessee preferred appeal before the first appellate authority. 3. Before the learned CIT(A), the assessee made following subm....
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....sal of NPA interest credited to P&L account Aggrieved, now the assessee is in second appeal before the Tribunal." Department has also filed an appeal on the point of reversal of subvention of Interest receivable credited in P&L account. However Tribunal has made discussion on both the issue simultaneously in para no. 02 to 06 and in para 07 give a conclusion to ground of appeal filed by assessee. On the issue of reversal of NPA interest in the appellate order of Honourable Tribunal Para 07 reads as under : "07. In view of the above details we are convinced that the assessee's claim is bonafide and the amount which has been reversed and debited to profit and loss account for A.Y. 11-12 has already been added in the computation of income because the assessee has already claimed the same in computation of income for A.Y. 2010-11 i.e. year under consideration. In view of these facts, we allow the claim of the assessee and this issue of assessee's appeal is allowed." The conclusion drawn by the Honourable Tribunal in para 07 of the order, there is thin line of difference in conclusion drawn by the Tribunal. The Tribunal has allowed the appeal....
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....iled submission and paper book on 18.08.2017 and 24/10/2018, appellant further submits as under : Regarding ground No.01:- Overdue interest provision on NPA accounts credited (reversal) in profit and loss account is claimed as a deduction in return of income, as in the earlier assessment years 2008-09 an amount of Rs. 11,17,33,000/- was debited in the profit and loss account on account of overdue interest provision on NPA account and same was added in the assessment. Thereafter on reversal of excess provision following amounts have been credited in the profit and loss account and same has been claimed as deduction in the computation of income. A.Y. Overdue Interest Provision on NPA accounts added in the return of income Reversal out of the Overdue Interest Provision on NPA Accounts 08-09 11,17,33,000 -- 09-10 -- 3,80,40,000/- 10-11 -- 1,80,60,000 (claimed and allowed by Hon. ITAT, Nagpur Bench) 11-12 2,91,38,000 (Pending Before your Honor) In A.Y. 2010-11 the amount of Rs. 1,80,60,000/- on account of reversal of excess provision for overdue interest on NPA accounts has been allowed by the Hon. ITAT Nagpur Bench i....
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....unt, being eligible for deduction from the total income, the amount of Rs. 2,91,38,000/- for AY 2011-12, as discussed in the table preceding para 5.6.1 is held to be allowable. Accordingly, the AO is direct to delete the addition made on this account. Thus, Ground No.1 stands allowed." The Revenue being aggrieved by the order so passed by the learned CIT(A), filed appeal before the Tribunal. He prayed that interest once accrued is irreversible though not collected. 5. Before us, the learned Departmental Representative assailing the impugned order passed by the learned CIT(A) submitted that the the learned CIT(A) was not at all justified in deleting the addition made by the Assessing Officer. He thus prayed that the impugned order be reversed. 6. The learned Counsel for the assessee supported the order passed by the learned CIT(A) and justified the conclusion drawn by the assessee by directing the Assessing Officer to delete the addition made by the Assessing Officer in respect of overdue interest amounting to Rs. 2,91,38,000. In support of his arguments, the learned Counsel relied upon the following case laws:- 1) ACIT v/s Arvind Sahakari Bank Ltd. ITA no.376 & 37....
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....o find that this issue is further also covered by the decision of the Co-ordinate Bench of the Tribunal, Nagpur, in ACIT v/s Arvind Sahakari Bank Ltd., ITA no.376 and 377/Nag./2013, order dated 16/09/2015, wherein the Tribunal observed as under:- "10. As regards the second issue, the interest accrued of non performing assets of the bank, the AO has opined that the same is taxable on accrual basis. In this regard the AO further placed reliance on the judgment of the Hon'ble Apex Court in the case of Southern Technologies Ltd. 320 ITR 577. Upon assessee's appeal, learned CIT (Appeals) referred to the ITAT Vishakhapatnam Bench decision in the case of CIT vs. Durga Urban Cooperative Bank Ltd. (supra) which read as under: "9. The Hon'ble Supreme Court in the case of M/s Southern Technologies Ltd (Supra) dissected the matter into two parts viz.. a) Income Recognition and b) permissible deduction/exclusions under the Income Tax Act. In so far as income recognition is concerned, the Hon 'ble Supreme Court held that Section 145 of the Income Tax Act has no role to play and the Assessing Officer has to follow Reserve Bank of India directions 1998, since by v....
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....d under the Companies Act. The Hon 'ble Supreme Court has held in the case of Southern Technologies Ltd (Supra), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-a-vis income recognition principle under the Companies Act. Hence Sec.45 Q of the RBI Act shall have overriding effect over the income recognition principle followed by cooperative banks also. Hence the Assessing Officer has to follow the Reserve Bank of India directions 1998, as held by the Hon 'ble Supreme Court. 10.1 Based on the prudential norms, the assessee herein did not admit the interest relatable to NPA advances in its total income. The Hon'ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd (Supra) has held that the intereston NPA assets cannot be said to have accrued to the assessee. In this regard, the following observations of Hon'ble Delhi High Court in the above cited case are relevant: "What to talk of interest, even the principle amount itself had become doubtful to recover. In this scenario it was legitimate move to infer that interest income thereupon has not "accrued". The said decision of the Hon 'ble Delhi High Court is ....