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2019 (2) TMI 238 - HC - Income TaxSection 43D - applicability - cooperative bank - scope of amendment - retrospective or prospective - Held that:- The Gujarat High Court in case of Pr. CIT v/s. Shri Mahila Sewa Sahakari Bank Ltd. [2016 (8) TMI 377 - GUJARAT HIGH COURT] had undertaken the detailed exercises to examine an identical situation. The Cooperative Banks were acting under the directives of the Reserve Bank of India with regard to the prudential norms set out. The Court was of the opinion that, taxing interest on NPA cannot be justified on the real income theory. Identical issue was also examined in case of Pr. CIT v/s. Ludhiana Central Coop. Bank Ltd [2018 (11) TMI 442 - PUNJAB AND HARYANA HIGH COURT] a held that tribunal while relying upon the various pronouncements had decided the issue regarding taxability of interest on NPA in favour of the assessee as being taxable in the year of receipt. The deletion made by the CIT(A) on account of addition regarding interest accrued on NPA. No illegality or perversity could be demonstrated by learned counsel for the Revenue in the aforesaid findings recorded by the Tribunal. Section 43D essentially provides for charging of interest on actual basis in case of certain special circumstances, in the hands of the public financial institutions, public companies etc. Explanation to Section 43D defines certain terms for the purpose of said section. Clause (g) was inserted in the said explanation by Finance Act, 2016 w.e.f. 1.04.2018 which provides that for the purpose of such Section, Cooperative Banks, Primary Agricultural Credit Society and Primary Agricultural and Rural Development Bank shall have meanings respectively assigned in Explanation to subsection of Section 80B of the Act. By virtue of such insertion, the Cooperative Banks would get the benefit of 43D of the Act. One way of looking at this amendment, can be that, the same is curative in nature and would, therefore, apply to pending proceedings, notwithstanding the fact that, the legislature has not made the provision retrospective. - Decided against revenue
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