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2015 (7) TMI 38 - AT - Income TaxAddition of interest receivable on NPAs/sticky loans / advances - CIT(A) deleted the addition - Held that:- The issue in the present appeal against the recognition of interest receivable on sticky loans/advances is identical to the issue in assessee's own case relating to assessment year 2010-11 [2015 (7) TMI 37 - ITAT PUNE] wherein find no reasons to interfere with the ultimate conclusion of the CIT(A) in deleting the impugned addition relating to interest income in respect of NPAs. 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 (2010 (1) TMI 5 - SUPREME COURT OF INDIA), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-à-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.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 (2010 (11) TMI 88 - Delhi High Court ) has held that the interest on NPA assets cannot be said to have accrued to the assessee. Thus we hold that the interest on NPAs is not taxable in the hands of the assessee for the captioned assessment year. Consequently, the grounds of appeal raised by the Revenue are dismissed. - Decided in favour of assessee.
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