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2014 (11) TMI 240 - AT - Income TaxInterest on sticky advances/nonperforming assets - Whether the CIT(A) is justified in deleting the addition which was made in respect of interest on sticky advances Held that:- Revenue was of the view that assessee bank has not considered the interest receivable on the sticky advances/nonperforming assets (NPA) as an income and it has not been taken to the profit & loss account but has directly taken to the balances - In Karnavati Cooperative Bank Ltd. Vs. Dy.CIT [2011 (11) TMI 367 - ITAT AHMEDABAD] the same issue has been decided and held that interest on the sticky advances/NPA advances cannot be brought to tax by following the decision in the case of Uco Bank Versus Commissioner of Income-Tax [1999 (5) TMI 3 - SUPREME Court] - Vide an explanation (d) r.w.s. 36(1)(viia) annexed to section 43-D the definition of the entities incorporated by the section have been defined and in the absence of any contrary material, the assessee is covered by one of the entities, hence the provisions of section 43-D are to be applied - The CBDT u/s.119 of the I.T. Act has power to issue Circulars in exercise of its statutory powers - If the Board consider it necessary to lay down certain Rules and then direct the sub-ordinate authorities, such directions are required to be followed and such Circular would be binding on the Department unless and until held as ultra vires by a court of law - in terms of CBDT Circular the interest is to be added as income only when actually received or credited in respect of the "sticky advances" while making assessment for a financial institution. Interpretation of the language of the statute Concept of real income approved in the case of banking business Held that:- If the statute has used the terminology for the chargeability of interest on the basis when "credited" or "actually received", then no ambiguity has been left by the Statute - If the statute is so clear that an interpretation can easily be made, then that exact meaning should be given to the language of the Section - section 43-D has to be applied in its letter and spirit - assessee has directly taken the interest to the Balance Sheet and it is not routed through the Profit & Loss Account thus, there is no reason to interfere in the order of the CIT(A) Decided against revenue.
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