Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Shri Mahila Sewa Sahakari Bank Ltd Versus The Asst. CIT (OSD)

Accrual of interest - Addition being interest on N.P.A. accounts not credited to P&L account - whether provisions of section 43D would not be applicable to the appellant if it is not a scheduled bank? - Co-operative Bank not being a scheduled bank - assessee submitted that as per the RBI guidelines, the interest accrued on Non-performing Assets (NPA) cannot be subjected to tax - assessee also submitted that on the principles of “income recognition” as per guidelines of the RBI, the interest inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ologies Ltd (2010 (1) TMI 5 - SUPREME COURT OF INDIA), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-a-vis income recognition principle under the Companies Act. Hence Sec.45 Q of the RBI Act shall have overriding effect over the income recognition principle followed by cooperative banks also. Hence the Assessing Officer has to follow the Reserve Bank of India directions 1998, as held by the Hon'ble Supreme Court. Thus no reasons to interfere with the ult .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

66 - MADRAS HIGH COURT] in respect of application of the judgement of the Hon’ble Apex Court rendered in the case of Southern Technology Ltd.(supra) on income recognition norms prescribed by R.B.I. - AO directed to delete the addition. - Decied in favour of assessee. - I.T.A. No. 62/Ahd/2014 - Dated:- 27-3-2015 - Shri N.S. Saini And Shri Kul Bharat JJ. For the Appellant : Shri R.C. Shah, AR For the Respondent : Shri M.K. Singh, Sr.DR 27/03/2015 ORDER Per Shri Kul Bharat, JUDICIAL MEMBER : This a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ddition of ₹ 17273000 be deleted. 2. That the C.I.T.(Appeals), while confirming the addition of ₹ 172.73 lacs, erred in not following the decisions of the Honourable I.T.A.T., Ahmedabad itself in the cases of Sardarganju Mercantile Coop. Bank Ltd. V. A.C.I.T. and Karnavati Co-op.Bank Ltd. V. D.C.I.T. though in the later decision, the decision of the Honourable Supreme Court in the case of Southern Technologies Ltd. relied upon by him in a wrongful manner was duly considered and disti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1961 (hereinafter referred to as the Act ) was framed vide order dated 28/02/2013, thereby the Assessing Officer (AO in short) made addition on accrued interest on NPAs amounting to ₹ 1,72,73,000/-. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee dismissed the appeal. Now, the assessee is further in appeal before us. 4. The ld.counsel for the assessee submitted that the issue is squarely covered in favour of the assesse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

guidelines, the interest accrued on Non-performing Assets (NPA) cannot be subjected to tax. He has also placed reliance on the decision of the Coordinate Bench (ITAT B Bench Pune) rendered in the case of Asst.CIT vs. Solapur Siddheshwar Sahakari Bank Ltd. in ITA Nos.2220 and 2221/PN/2013 for AYs 2009-10 & 2010-11, order dated 31/10/2014. He drew our attention towards para-10 of the said decision of the Coordiante Bench of Pune. Further, the ld.counsel for the assessee placed reliance on the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o the facts in the case of Sardarganj Mercantile Co-op.Bank Ltd. vs. ACIT(supra). He further relied on the decision of the Coordinate Bench (ITAT B Bench Chandigarh) rendered in the case of Asst.CIT vs. Punjab State Co-op.Bank Ltd. reported at (2013) 34 taxmann.com 128 (Chandigarh - Trib.), order dated 06/03/2013. The ld.counsel for the assessee also submitted that on the principles of income recognition as per guidelines of the RBI, the interest income is required to be offered for taxation on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided this issue in paras-3.2 to 3.11 of his order, by observing as under:- 3.2 I have carefully considered the facts of the case in the light of submissions made by the appellant , the arguments taken by the assessing officer and the material available on records. The arguments taken by the appellant indicate that the addition made by the Id A O is being challenged on follow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

like accrued interest on NPAs would not arise. > That credit of income disclosed as interest income in subsequent years be allowed against addition made in the current year. > That CBDT Circular bearing F No. 201/21/84-ITA-II dated 9-10-1984 is applicable in its case wherein it has been held that interest on accrual basis will not be taxed if not received for three years even though credited to 'interest suspense account'. 3.3 The issue regarding the applicability of section 43D a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anything to the contrary contained in any other provision of this Act,- (a) in the case of a public financial institution or a scheduled bank or a State financial corporation or a State industrial investment corporation, the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed having regard to the guidelines issued by the Reserve Bank of India in relation to such debts; (b) in the case of a public company, the income by way of interest in relati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y that institution or bank or corporation or company, whichever is earlier. Explanation.-For the purposes of this section,- (a) "National Housing Bank" means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987); (b) "public company" means a company,- (i) which is a public company within the meaning of section 394 of the Companies Act, 1956(1 of 1956); (ii) whose main object is carrying on the business of providing long-term .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Explanation to clause (viia) of sub-section (1) of section 36; (e) "State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951); (f) "State industrial investment corporation" means a Government company within the meaning of section 61796 of the Companies Act, 1956 (1 of 1956), engaged in the business of providing long-term finan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Transfer of Undertakinns) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) 77[***];] 3.4 A perusal of the above statute indicates that section 43D rws Expln. (ii) of clause (viia) of section 36 prescribes exemption from disclosure of interest income on accrual basis only to those entities which are covered by the said section. The AO has clearly brought evidence on record to indicate that the appellant bank .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case. It is a settled principle of law laid down by honourable Apex Court and reiterated by several high Courts that if the provisions of law are un ambiguous and clear then no interpretation is to be applied. Hon'ble Apex Court in the case of Smt Tarulata Shyamv vs GIT (1977) 108 ITR 345 observed that 'to us there appears no justification to depart from the normal rule of construction according to which the intention of legislature is primarily to be gathered from the words used in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

kashnath Khanna vs CIT (2004) 266 ITR 1 (SC) Hon'ble Apex Court observed that 'once it is shown that the case of the assessee comes within the latter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be'. It is further seen that in several other judgements as in the cases quoted at 40 ITR 142(SC), 72 ITR 286(SC), 222 ITR 831 (Guj) etc. it has been held time and again that once the provisions of a statute are clear, no meanings or intentions a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e clear ambit of that section. 3.5 Coming to the argument that Hon'ble jurisdictional Tribunal in the case of Karnavati Co Op Bank has laid down that provisions of sec 43D are applicable in the case of unscheduled banks has been examined and it' is noted that the appellant has misinterpreted and inadequately appreciated the observation of Hon'ble Tribunal in the said case. It is pertinent to point out at this stage the observations of the Hon'ble Tribunal in the said case ". .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o be applied." A perusal of the above clearly shows that Hon'ble Tribunal has not laid down any ratio regarding application of provision of sec 43D in respect of unscheduled banks. What the Hon'ble Tribunal actually observed in the cited case was that in the absence of any contrary material, being made available for kind consideration of Hon'ble Tribunal, in that case it was a presumption that the appellant in that case i.e. Karnavati Co Op Bank was covered by provisions of sec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#39;ble Tribunal. In its order bearing ITA No 529 & 530/Ahd/2013 dated 21-6-2013 hon;ble Tribunal has in para-5 of their impugned order have observed that what is fundamental to this controversy is the status of the appellant as to whether it is a scheduled bank or not. Thus the Hon'ble Tribunal has remitted the issue back to the file of the A O with following remarks :- ".....With these brief backgrounds, we have heard both the sides. Although the assessee is before us for the seco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

te from the concerned authority clearly mentioning the status of the assessee-bank, and place the same before the AO......" From a plain reading of the above, it clearly transpires that the Hon'ble Tribunal has appreciated the argument that provisions of section 43D would not be applicable to the appellant if it is not a scheduled bank. Consequently, the argument of the appellant for not offering interest income on accrual basis fails on this account. 3.7 Coming to the next argument of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the taxability of an income otherwise permissible under the I T Act. Thus, the Hon'ble Court has held as under :- "....31. RBI Directions, 1998 have been issued under section 45JA of RBI Act. Under that section, power is given to RBI to enact a regulatory framework involving prescription of prudential norms for NBFCs which are deposit taking to ensure that NBFCs function on sound and healthy lines. The primary object of the said 1998 Directions is prudence, transparency and disclosure. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are now required to state true and correct profits, without projecting inflated profits. Therefore, in our view, RBI . Directions, 1998 deal only with presentation of NPA provisions in the Balance Sheet of an NBFC. It has nothing to do with the computation or taxability of the provisions for NPA under the Income-tax Act. 32. Prior to RBI Directions, 1998, Advances were stated net of provisions for NPAs/bad and doubtful debts. They were shown at net figure (Advances less Provisions for NPAs) and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s" and not as a deduction from "Sundry Debtors/ Advances". Therefore, RBI has taken a position as a matter of disclosure, with which we agree, that if an NBFC deducts a provision for NPA from "sundry debtors/loans and advances", it would amount to netting from the value of assets which would constitute breach of Para 9 of RBI Directions, 1998. Consequently, NPA provisions should be presented on the "Liabilities side" of the Balance Sheet under the head "Cu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

esented in terms of 1998 Directions. There are cases where on facts courts have taken the view that the so-called provision is in effect a write off. Therefore, in our view, RBI Directions, 1998, though deviate from accounting practice as provided in the Companies Act, do not override the provisions of the Income-tax Act. Some companies, for example, treat write offs or expenses, or liabilities as contingent liabilities. For example, there are companies which do not recognize mark-to-market loss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be decided only on the basis of presentation. Such presentation will not bind the authority under the Income-tax Act. Ultimately, the nature of transaction has to be examined. In each case, the authority has to examine the nature of expense/loss. Such examination and finding thereon will not depend upon presentation of expense/loss in the financial statements of the NBFC in terms of the 1998 Directions. Therefore, in our view, the RBI Directions, 1998 and the Income-tax Act operate in different .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(including the nature of transaction), as stated above. One must keep in mind another aspect. Reduction in NPA takes place in two ways, namely, by recoveries and by write off. However, by making a provision for NPA, there will be no reduction in NPA. Similarly, a write off is also of two types, namely, a regular write off and a prudential write off. [See Advances Accounts by Shukla, Grewal, Gupta, Chapter 26, Page 26.50] If one keeps these concepts in mind, it is very clear that RBI Directions, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

view of the real income theory have also been analysed. It is seen that principal reliance has been placed upon the decision in the case of Godhara Electricity 225 ITR 746 dt 3/9/97 . Without prejudice to the fact that facts of Godhra electricity and current appeal are clearly distinguished it is noted that we now leave the benefit of a direct and incidentally subsequent decision of Hon'ble Supreme Court in the case of Southern Technologies Ltd. 320 ITR 577 dt 11-1-2010. After comprehensive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on, reliance was placed on "Real Income Theory". 35. We find no merit in the above contention. In the case of Poona Electric Supply Co. Ltd. v. ClT[1965] 57 ITR 521, this is what the Supreme Court had to say : ". . . Income-tax is a tax on the real income, i.e., the profits arrived at on commercial principles subject to the provisions of the Income-tax Act. The real profit can be ascertained only by making the permissible deductions. There is a clear cut distinction between . . . .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

only by making the permissible deduction. . . ". [Emphasis supplied] (p. 391) 37. The point to be noted is that the Income-tax Act is a tax on "real income", i.e., the profits arrived at on commercial principles subject to the provisions of the Incometax Act. Therefore, if by Explanation to section 36(1)(vii) a provision for doubtful debt is kept out of the ambit of the bad debt which is written off then, one has to take into account the said Explanation in computation of total i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Provision against NPA to the taxable income of the assessee. We find no merit in this contention. Under the Income-tax Act, the charge is on Profits and Gains, not on gross receipts (which, however, has Profits embedded in it). Therefore, subject to the requirements of the Income-tax Act, profits to be assessed under the Income-tax Act have got to be Real Profits which have to be computed on ordinary principles of commercial accounting. In other words, profits have got to be computed after .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me" which is income computed according to ordinary commercial principles but subject to the provisions of the Income-tax Act. Under section 36(1)(vii) read with the Explanation, a "write off" is a condition for allowance. If 'Yea/profit" is to be computed one needs to take into account the concept of "write off" Jn contradistinction to the "provision for doubtful debt"..,.." An examination of the above decision clearly postulates that Hon'ble .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o laid down by Hon'ble Apex Court and in respectful compliance to V.ie same it is held that the decisions relied upon by the appellant bank possibly do not come to its rescue. It is worthwhile to mention that the above decision of Hon'ble apex takes precedence over other decisions including its own decision in the case of Godhra electricity as the same is latest and direct on the issue at hand. 3.9 A perusal of the submissions made by the appellant indicates that it has alternatively arg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nds of appeal, which have been reproduced supra at para-2.1 above. As far as disclosure of income in a return of income and any modification in respect of such disclosed income in a return of income is concerned, it is seen that the procedure for the same is prescribed u/s. 139 of the Act. There is no provision under the Act, of the type requested by the appellant, to allow deduction of income of a particular year against any other income. Consequently, the argument of the appellant for credit o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gh the delegated legislation vij circulars and notifications. The provisions of section 43D are clear and therefore the same cannot be overridden by a circular. Without prejudice it is seen that the statutory provisions were brought to act much later then the said circular (which was issued in 1984) and therefore the said Circular in any case would not have any effect or binding force upon the A O. it is a trite law that a circular issued prior to introduction of parent statute would have no rel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

effectively demonstrate with any cogent evidence that the addition was unwarranted Consequently, the addition of ₹ 1,72,73,000/- made by the A O on account of accrued interest on NPAs is confirmed and the ground of appeal No., 1 raised is dismissed. 4.0 In the result, the appeal is dismissed. 5.1. However, we find that under the identical facts, the Coordinate Bench of this Tribunal in the case of ACIT vs. Solapur Siddheshwar Sahakari Bank Ltd. in ITA Nos.2220&221/PN/2013 for AYs 2009- .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dgement of the Hon'ble Delhi High Court in the case of M/s Vasisth Chay Vyapar Ltd., 330 ITR 440 (Del) as well as the judgement of the Hon'ble Madras High Court in the case of CIT vs. Sakthi Finance Ltd., (2013) 31 taxmann.com 305 (Madras), which had expressed divergent views with respect to the issue of accrual of interest income on NPA advances; and, following the proposition that in the absence of any judgement of the Jurisdictional High Court, there being contrary judgements of the n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of section 43D of the Act to the assessee is concerned, there is a convergence of opinion between the assessee and the Revenue to the effect that the same is not applicable to the assessee. Ostensibly, assessee is a Co-operative Bank carrying on banking business in terms of a license granted by RBI and is not a 'scheduled bank' included in second schedule of RBI so as to fall within the scope of section 43D of the Act. Notably, section 43D of the Act prescribes that interest income on s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e impugned income has accrued to the assessee during the year under consideration. 9. In this connection, we find that the Visakhapatnam Bench of the Tribunal in the case of The Durga Cooperative Urban Bank Ltd. (supra) has considered an identical controversy. The assessee before the Visakhapatnam Bench was a Co-operative Bank operating under a license issued by RBI but was not a 'scheduled bank' so as to fall within the scope of section 43D of the Act. The issue related to taxability of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by RBI, was considered by the Hon'ble Delhi High Court in the case of M/s Vasisth Chay Vyapar Ltd. (supra) wherein after considering the decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd. (supra) it was held that interest income relatable to NPAs was not includible in total income on accrual basis since the same did not accrue to the assessee. The following discussion by the Visakhapatnam Bench of the Tribunal in the case of The Durga Cooperative Urban Bank .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as a non banking financial company and it was also bound by the "Prudential norms directions" issued by the Reserve Bank of India for Income recognition and asset classification. The assessee did not include the interest income relatable to NPA assets in its total income. The Assessing Officer, however, added the said interest as the income of the assessee by holding that it had "accrued" to the assessee even it was not realized as the assessee was following mercantile system .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ined in any other law for the time being in force or any instrument having effect by virtue of any such law". The High Court took note of the fact that the provision of 45Q of Reserve Bank of India has overriding effect over any other law. Then the Hon'ble High Court also considered accounting standard "AS-9" on "Revenue recognition" and also extracted following relevant portion from the said accounting standard: 9. Effect of uncertainties on Revenue Recognition 9.1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

enue only when it is reasonably certain that the ultimate collection will be made. Where there is no uncertainty as to ultimate collection, revenue is recognized at the time of sale or rendering of service even though payments are made by installments. 9.3 When the uncertainty relating to collectability arises subsequent to the time of sale or the rendering of the service, It is more appropriate to make a separate provision to reflect the uncertainty rather than to adjust the amount of revenue o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

recognized". 8.2 The Delhi High Court also considered the decision rendered in the following cases; i) CIT vs. Elgi Finance Ltd., 293ITR 357 (Mad) ii) CIT vs. KKM Investments (Cal) - SLP dismissed by Supreme Court (310 ITR 4) iii) CIT vs. Motor Credit Co (P) Ltd., 127 ITR 572 (Mad) iv) UCO Bank vs. CIT 237 ITR 889 (SC) v) CIT vs. Shoorji Valiabhdas & Co 46 (TR 144 (SC) vi) Godhra Electricity Co. Ltd., Vs. CIT 225 ITR 746 vii) CIT vs. Goyal M G Gases (P) Ltd., 303 ITR 159 (Del) viii) CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Apex Court and explained the same as under: "We have already held that even under the Income Tax Act, interest income had not accrued. Moreover, this submission of Mr. Sabharwal is based entirety on the judgment of the Supreme Court in the case of Southern Technology (Supra). No doubt, in first blush, reading of the judgment gives an indication that the Court has held that Reserve Bank of India Act does not override the provisions of the income Tax Act. However, when we examine the issue in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

claimed as aforesaid on the ground that the provision of NPA was not in the nature of expenditure or loss but more in the nature of a reserve, and thus not deductible under section 36(i)(vii) 'of the Act. The Assessing Officer, however, did not bring to tax ₹ 20,34,605/- as income (being income accrued under the mercantile system of accounting). The dispute before the Apex Court centered around deductibility of provision for NPA. After analyzing the provisions of the Reserve Bank of In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n terms of the Prudent/a Norms, even, though the same deviated from mercantile system of accounting and/or section 45 (sic. 145) of the Income Tax Act. It can be said, therefore, that the Apex Court approved the 'real income' theory which is engrained in fie Prudential Norms for recognition of revenue by NBFC". 9. The Hon'ble Supreme Court in the case of M/s Southern Technologies Ltd (Supra) dissected the matter into two parts viz., a) Income Recognition and b) permissible deduc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Income Tax Act is concerned, (which involves deduction of permissible deductions and exclusions) the admissibility of such deductions shall be governed by the provisions of the Income Tax Act. The relevant observations of the Hon'ble Supreme Court are extracted below: "Applicability of Section 145 40. At the outset, we may state that in essence RBI Directions 1998 are Prudential/Provisioning Norms issued by RBI under Chapter IIIB of the RBI Act, 1934. These Norms deal essentially wit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

putation of taxable income. These Directions cannot overrule the 'permissible deductions" or "their exclusion" under the IT Act. The inconsistency between these Directions and Companies Act is only in the matter of Income Recognition and presentation of Financial Statements. The Accounting policies adopted by an NBFC cannot determine the taxable income. It is well settled that the Accounting Policies followed by a company can be changed unless the AO comes to the conclusion th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndia. Hence the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assesses as it is applicable to the companies registered under the Companies Act. The Hon'ble Supreme Court has held in the case of Southern Technologies Ltd (Supra), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-a-vis income recognition principle under the Companies Act. Hence Sec.45 Q of the RBI Act shall have overriding effe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e. In this regard, the following observations of Hon'ble Delhi High Court in the above cited case are relevant: "What to talk of interest, even the principle amount itself had become doubtful to recover. In this scenario it was legitimate move to infer that interest income thereupon has not "accrued". The said decision of the Hon'ble Delhi High Court is equally applicable to the issue in our hands. Accordingly we do not find any infirmity with the decision of the learned C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ble Madras High Court in the case of CIT vs. Sakthi Finance Ltd., (2013) 31 taxmann.com 305 (Madras) has differed with the judgement of the Hon'ble Delhi High Court in the case of M/s Vasisth Chay Vyapar Ltd. (supra) on a similar issue, i.e. relating to interest income on NPAs. The learned Departmental Representative further pointed out that the Hon'ble Madras High Court followed the decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd. (supra) in holding th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

;ble Supreme Court in the case of Southern Technologies Ltd. (supra) also applied to the Income Recognition Norms provided by RBI and therefore it held the .interest income on NPAs is liable to be taxed on accrual basis and not in terms of RBI's guidelines. But the Hon'ble Delhi High Court in the case of M/s Vasisth Chay Vyapar Ltd. (supra) has taken a view that Southern Technologies Ltd. (supra) case did not apply to the Income Recognition Norms prescribed by RBI. Ostensibly, there is d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CIT vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC). 13. Therefore, in view of the aforesaid discussion, we are inclined to follow the decision of our co-ordinate Bench in the case of The Durga Cooperative Urban Bank Ltd. (supra) and accordingly the order of the CIT(A) is liable to the affirmed. We hold so. 14. In the result, the appeal of the Revenue is dismissed." 5. Since it was a common point between the parties that the facts and circumstances in the present case are identical to th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

Forum: Input tax credit

Forum: GST on Notional rent

Forum: GST ON SALES PROMOTION

Forum: 3B mistake

Forum: Excise duty credit on finished stock at additional place of business.

Forum: PROCEDURE FOR SHIFTED OF FINISHED GOODS FROM AP KARNATAKA TO UP

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

Forum: Input credit of gst paid on urd

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks

Article: TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News: Manmohan takes potshots at note ban, 'hasty' rollout of GST

News: GST on petrol, diesel requires wider discussion: Nitish

Article: WHEN CAN ONE TAKE ITC FOR RCM CASES?

Notification: TDS liability under Section 51 of CGST, 2017 come into force w.e.f. 18-9-2017 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified

Notification: Central Goods and Services Tax (Seventh Amendment) Rules, 2017

Notification: Seeks to extend the last date for filing the return in FORM GSTR-3B for the months of August to December, 2017

Circular: Filing of Special Leave Petition against Orders of Hon'ble High Courts staying Collection of Tax under GST- reg.

Highlight: Exemption u/s 54F - LTCCG - once entire net consideration is invested, the absence of completion certificate cannot be a ground to deny the benefit of deduction.

Highlight: Deduction u/s 10B - initial AY - Mere authorization to enable the Assessee to import material or export produce in the earlier date would not ipso facto tantamount to commencement of substantial activity of ‘manufacture’/’production’.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version