TMI Blog2013 (4) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... ths. The assessee is a Non-Banking Financial Company (NBFC) and, therefore, is bound by the directions given by the Reserve Bank of India. These directions, inter alia, mandate a NBFC to declare such advances as Non Performing Assets (NPA) when the accrued interest therein is not paid by the debtor continuously for six months. The assessee company being NBFC is governed by the provisions of RBI Act. In such a case, interest income cannot be said to have accrued to the assessee having regard to the provisions of section 45Q of the RBI and Prudential Norms issued by the RBI in exercise of its statutory powers. As per these norms, the ICD had become NPA and on such NPA where the interest was not received and possibility of recovery was alm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer. 5. Against the above order the assessee is in appeal before us. 6. Ld. Counsel of the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in the batch of cases in I.T.A. No. 552 of 2005 in the case of C.I.T. vs. M/s Vasisth Chay Vyapar Ltd. vide order dated 29.11.2010. In this case the brief facts of the case were as under:- "To state in brief, the assessee herein had advanced certain Inter Corporate Deposits (ICD) to M/s Shaw Wallace Company. The interest thereupon could not be received by the assessee for more than six months. The assessee is a Non-Banking Financial Company (NBFC) and, therefore, is bound by the directions given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with Shaw Wallce since the assessment year 1996-97 as it had become NPAs in accordance with the Prudential norms which was entered in the books of accounts as well. The assessee has further successfully demonstrated that even in the succeeding assessment years, no interest was received and the position remained the same until the assessment years 2006-07. Reason was adverse financial circumstances and the financial crunch faced by Shaw Wallace. So much so, it was facing winding up petitions which were filed by many creditors. These circumstances, led to an uncertainty in so far as recovery of interest was concerned, as a result of the aforesaid precarious financial position of Shaw Wallace. What to talk of interest, even the principal am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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