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2018 (1) TMI 1346 - KARNATAKA HIGH COURTAddition on account of accrued interest on loans which are classified as "Non-performing Assets" - Held that:- The issue involved in this appeal is no more res-integra in view of the judgment of this Court in Commissioner of Income Tax and another V/s Canfin Homes Ltd. [2011 (8) TMI 178 - KARNATAKA HIGH COURT] as held Non-performing asset is an asset in respect of which interest has remained unpaid and has become past due. Once a particular asset is shown to be a non-performing asset, then the assumption is it is not yielding any revenue. When it is not yielding any revenue, the question of showing that revenue and paying tax would not arise. As is clear from the policy guidelines issued by the National housing Bank, the income from non-performing asset should be recognised only when it is actually received. That is what the Tribunal held in the instant case. Therefore, the contention of the Revenue that in respect of non-performing assets even though it does not yield any income as the assessee has adopted a mercantile system of accounting, he has to pay tax on the revenue which has accrued notionally is without any basis. Mere nomenclature adopted with reference to the bad loans and advances receivable, would refer to all non-performing assets of any nature, of whatever category it was placed as a non-performing asset and accordingly the substantial question of law is answered against the Revenue.- Decided in favour of the assessee
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