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2020 (9) TMI 443 - Tri - Companies LawVoluntary revision of financial statements - Income Recognition - NPA - Section 131 of the Companies Act, 2013 read with Rule 77 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- Neither of the respondent authorities have disputed the existence of annexure A-4 i.e. Master Circular of Prudential Norms on Income Recognition, Assets Classification and Provisioning- pertaining to Advances Portfolio of the Reserve Bank of India and its applicability to the loans given by the banks when the said loans become NPA. The petitioner has filed Annexure A-5 i.e. statement of the loan account and the OTS letter issued by the bank to show that the bank has not followed the RBI Circular, while treating the loan which was classified as NPA and the subsequent OTS, whereunder the loan was closed on payment of the required amount as a full and final settlement of the loan account. A perusal of Section 131 of the Act, which was notified with effect from 01.06.2016, reveals that the same was provided to meet the situations as mentioned in the petition, subject to fulfilling the requirements therein. Once Section 131 of the Act, provides for revision of the financial statements in respect of “any of the three preceding financial years”, it clearly encompasses three prior years upon notification of the concerned section. Thus the contention of the ROC that the petition is not maintainable in respect of any financial year prior to 2016-17 cannot be accepted. What is required to be seen is that whether the petitioner-company satisfies the requirements under Section 131 of the Act read with Rule 77 of the 2016 Rules. In any case, as per the Income Tax Returns of the petitioner-company, for the relevant years in question, copies of which are filed in Annexure A-6 (Colly) as already stated, it is seen that the relevant interest amounts for the particular years, being treated as accrued and not paid, is added back in computation to arrive at the assessable income. Thus there is no impact on revenue from the perspective of the Income Tax Department. The petitioner-company fulfilled the requirements under Section 131 of the Act and Rule 77 of the 2016 Rules and accordingly, the petitioner-company is entitled for seeking revision of its financial statements or board’s report, for the financial years, in question - Since the submissions with regard to treatment of NPA account by the bank and the settlement of the same by the petitioner-company with the bank as an OTS, is sufficiently proved by the petitioner by filing various documents and the said documents are not disputed by the respondent-authorities, the contention that the bank is a necessary party to the CP, is not tenable. In view of the provisions of the Section 131 of the Act, the instant petition is allowed and the petitioner is permitted to revise the financial statements of the company for the years 2015-16, 2016-17 and 2017-18, as per the accounting standards and its Board’s reports - Petition allowed.
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