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2017 (1) TMI 1255 - AT - Income TaxAccrual of income - Interest due on Non Performing Assets - as per CIT(A) addition made by treating accrued interest on NPAs as income of the assessee directed to be deleted - Held that - It remains an undisputed fact that the assessee co-operative bank has been following the mercantile system of accounting except with regard to interest pertaining to NPAs. As noted by the ld. CIT(A) this position stands accepted by the department in the earlier years. The assessee has been following the RBI guidelines in this matter. Its method of accounting is entirely in accordance with the RBI guidelines. The RBI guidelines need to be mandatorily followed by the assessee. Moreover this method of accounting adopted by the assessee is in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India. Section 45Q of the RBI Act provides in the non obstante Clause with which it begins that the provisions of the Chapter under which section 45Q falls shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being inforce. In M/s Vasisth Chay Vyapar Ltd. (2010 (11) TMI 88 - Delhi High Court ) it has been held that when an NBFC classifies an asset as a Non-performing Asset in accordance with the directions issued the Reserve Bank of India it is legitimate to infer that the interest income thereon is not accrued even though the NBFC is following the mercantile system of accounting. Interalia M/s Southern Technologies Ltd. (2010 (1) TMI 5 - SUPREME COURT OF INDIA ) has been distinguished in M/s Vasisth Chay Vyapar Ltd. (supra). Apropos the applicability of section 43D of the I.T. Act it is on record that during the proceedings before the ld. CIT(A) the assessee by way of submission dated 17.09.2015 the assessee had stated that the assessee had been confirmed by the Headquarter of the Punjab State Co-operative Bank to be a scheduled bank. This position has not been disputed. - Decided against revenue
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