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2019 (4) TMI 824 - AT - Income TaxAccrual of income - Addition towards accrued interest on NPAs - recognized accounting practice - real income or actual receipts - HELD THAT:- Appellant is co-op bank registered under the Gujarat Co-Op Society Act and carrying on banking business as per Reserve Bank of India guidelines. The appellant has furnished the complete list of Non Performing Assets as per RBI Guidelines and also furnished the details of interest accrued on such NPAs during the Financial Year 2010-11 which aggregated to ₹ 25,00,752/- and same was not charged as mandatorily stipulated under income recognition and Assets classification norms of Reserve Bank of India. As we can see, the assessee case is covered by Jurisdictional High Court in the matter of Pr.CIT vs. Shri Mahila Sewa Sahakari Bank Ltd. [2016 (8) TMI 377 - GUJARAT HIGH COURT] wherein it has been held that “ Non Performing Asssets – CANNOT BE RECOGNISED ON ACCRUAL BASIS – ASSESSEE BOUND BY RESERVE BANK OF INDIA GUIDELINES” and income from Non Performing Asset is not recognized on accrual basis but is booked as income only when it is actually received. Therefore bank should not take to income account, interest on Non Performing Assets on accrual basis. Respectfully following the above said judgment, we allow this ground of appeal. Disallowance of Investment Depreciation Reserve - HELD THAT:- As relying on M/S. GAJANAN NAGARI SAHAKARI BANK LTD. [2015 (6) TMI 551 - BOMBAY HIGH COURT] securities were stock in trade and so depreciation would amount to loss and not income-Authorities below held that this aspect was well settled through judgment of High Court in the case of Commissioner of Income Tax vs. Bank of Baroda [2003 (3) TMI 80 - BOMBAY HIGH COURT], as well as UCO Bank vs. the Commissioner of Income Tax- Supreme Court [1999 (9) TMI 4 - SUPREME COURT] held that merely because securities were kept under head by bank till maturity, said security could not be treated as purely investment.-Security held by bank was in nature of stock in trade - decided in favour of assessee.
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