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2015 (3) TMI 603 - AT - Income TaxInterest income on non-performing asset advances - Applicability of provisions of section 43D - assessee is a non-scheduled co-operative bank carrying on banking business in terms of a licence issued by the Reserve Bank of India (RBI) - as per the AO interest income on non-performing assets advances accrued to the assessee and accordingly, he brought to tax such interest income - CIT(A) deleted the addition - Held that:- As relying on Asst. CIT v. Omerga Janta Sahakari Bank Ltd. [2014 (12) TMI 355 - ITAT PUNE] who considered the judgment of CIT v. Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court] as well as the judgment of CIT v. Sakthi Finance Ltd. [2013 (3) TMI 266 - MADRAS HIGH COURT] which had expressed divergent views with respect to the issue of accrual of interest income on non- performing assets advances ; and, following the proposition that in the absence of any judgment of the jurisdictional High Court, there being contrary judgments of the non-jurisdictional High Courts, a decision which was favourable to the assessee was to be followed in view of the reasoning laid down by the hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court] and, thus the Tribunal decided the issue in favour of the assessee. Assessee is a Co-operative Bank carrying on banking business in terms of a license granted by RBI and is not a ‘scheduled bank’ included in second schedule of RBI so as to fall within the scope of section 43D of the Act - in Commissioner of Income tax Versus Vasisth Chay Vyapar Ltd. & others [2010 (11) TMI 88 - Delhi High Court] it was held that 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”- thus, there was no infirmity with the decision of the CIT(A) in holding that the interest income relatable on NPA advances did not accrue to the assessee – Decided against revenue.
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