9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (7) TMI 1605 - AT - Income TaxAddition on account of accrued interest on Non-Performing Assets (NPAs) - HELD THAT - We find that similar issue as before us arose in ITO Vs. Shankarrao Mohite Patil Sahakari Bank Ltd. 2016 (3) TMI 910 - ITAT PUNE and in ITO Vs. Samarth Sahakari Bank Ltd 2016 (3) TMI 910 - ITAT PUNE relating to assessment year 2011- 12 order dated 10.02.2016 and Kolhapur Mahila Sahakari Bank Ltd. Vs. ITO 2014 (1) TMI 1728 - ITAT PUNE relating t o assessment year 2009-10 vide order dated 29.01.2014. The Tribunal in turn following the ratio laid down by the Pune Bench of Tribunal in ACIT Vs. Osmanabad Janta Sahakari Bank Ltd. 2015 (3) TMI 886 - ITAT PUNE The Hon ble Bombay High Court in CIT Vs. M/s. Deogiri Nagari Sahakari Bank Ltd. 2015 (1) TMI 1218 - BOMBAY HIGH COURT has laid down the proposition that the interest accrued on NPAs is not taxable in the hands of assessee in view of the guidelines issued by the RBI. Following the same parity of reasoning we hold that no addition is warranted on account of interest accrued on NPAs. Accordingly we uphold the order of CIT(A) in deleting the addition made on account of interest accrued on NPAs. The grounds of appeal raised by the Revenue are thus dismissed.
Issues:
Appeal against CIT(A) order allowing interest on NPAs - Accrued interest treatment under section 43D r.w.r. 6EA - Tribunal's previous decisions favoring assessee - Taxability of interest on NPAs - Mercantile system of accounting - Addition made by AO - Applicability of RBI guidelines - Bombay High Court's proposition on interest accrued on NPAs. Analysis: The appeal before the ITAT Pune concerned the Revenue challenging the CIT(A) order related to the assessment year 2011-12, specifically regarding the treatment of interest on Non-Performing Assets (NPAs). The Revenue contended that the interest accrued on NPAs should be taxed as per section 43D r.w.r. 6EA, citing a previous order by the Pune ITAT in Cosmos Bank case. The CIT(A) had deleted the addition made by the Assessing Officer, leading to the appeal. The core issue revolved around whether the interest income on NPAs, not credited to the Profit & Loss Account by the cooperative bank, should be added to the income of the assessee following the mercantile system of accounting. The Revenue argued for taxability based on accrual, while the assessee relied on RBI guidelines to support non-taxability of such interest income. The Pune ITAT referred to similar cases involving cooperative banks like Shankarrao Mohite Patil Sahakari Bank Ltd. and Samarth Sahakari Bank Ltd., where the Tribunal favored the assessee's position. The Tribunal, aligning with its previous decisions and the reasoning in the Osmanabad Janta Sahakari Bank Ltd. case, upheld the CIT(A)'s decision to delete the addition of interest accrued on NPAs. Additionally, the Tribunal cited the Bombay High Court's ruling in CIT Vs. Deogiri Nagari Sahakari Bank Ltd., emphasizing that interest accrued on NPAs is not taxable based on RBI guidelines. Consequently, the ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s order and concluding that no addition was warranted for interest accrued on NPAs. In summary, the ITAT Pune, through a detailed analysis of relevant legal provisions, past decisions, and RBI guidelines, upheld the non-taxability of interest accrued on NPAs for cooperative banks following the mercantile system of accounting. The judgment provided clarity on the treatment of such interest income, aligning with established precedents and the Bombay High Court's stance, resulting in the dismissal of the Revenue's appeal.
|
