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2015 (7) TMI 37 - AT - Income TaxAccrual of interest income - Addition on account of interest receivables on sticky loans/advances - whether the provisions of section 43D are applicable to the assessee-bank? - CIT(A) deleted the addition - Held that:- Hon’ble High Court of Delhi in the case of Vashist Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court] in which the Hon’ble Delhi High Court has considered the decision in the case of Southern Technologies Ltd. [2010 (1) TMI 5 - SUPREME COURT OF INDIA]. The Tribunal in ACIT, Circle-3, Nanded Vs. Osmanabad Janta Sahakari Bank Ltd. [2015 (3) TMI 886 - ITAT PUNE] finally held that the interest income relatable to NPA advances did not accrue to the assessee. Turning to the facts of the case before us, the assessee herein is a cooperative bank and it is not in dispute that it is also governed by the Reserve Bank of India. Hence the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assessee as it is applicable to the companies registered 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-ŕvis 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. 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 interest on NPA assets cannot be said to have accrued to the assessee - Decided in favour of assessee.
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