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2017 (10) TMI 1605 - AT - Income TaxAccrual of income - taxability of interest on NPA’s - Non declaration of interest income on non performing assets - HELD THAT:- As in the case of Jalandhar Central Co-operative Bank Ltd. [2017 (1) TMI 1255 - ITAT AMRITSAR] has dismissed the appeals filed by revenue and similarly in the case of Kapurthala Central Co-operative Bank Ltd., [2017 (7) TMI 1418 - ITAT AMRITSAR] has again dismissed the appeals filed by revenue on similar issue The issue regarding taxability of interest on NPA’s is settled in favour of the assessee as being taxable in the year of receipt. As decided in THE LUDHIANA CENTRAL LUDHIANA CO-OP. BANK LTD. [2017 (1) TMI 778 - ITAT CHANDIGARH] argument of the learned D.R. that the decision of the Delhi High Court in the case of Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT] would not apply to the assessee’s case since the assessee is a cooperative society while in the case of Vasisth Chay Vyapar Ltd. (supra), the assessee was a NBFC, is also dismissed since the pr inciple enunciated by the Delhi High Court in Vasisth Chay Vyapar Ltd. (supra) has been followed in the case of Shri Mahila Sewa Sahakari Bank Ltd. [2016 (8) TMI 377 - GUJARAT HIGH COURT] and various other decisions cited by the assessee before us ,and the assessee in all those cases being a cooperative bank, the decision rendered therein squarely applies to the case of the assessee. Argument of the D.R. that the assessee is following the mercantile system of accounting is also dismissed since this aspect has been dealt with by 20 various High Courts referred to above wherein they have categorically held that even following the mercantile system of accounting the interest on NPA account cannot be said to have accrued in the impugned year since the recovery of the same was impossible and even otherwise for the purpose of Income Recognition the RBI Directions, 1998, had to be followed in view of section 45Q of the RBI Act. We find no infirmity in the order of the CIT(A),holding the interest on NPA’s as taxable in the year of receipt , so as to warrant interference. - Decided against revenue.
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