TMI Blog2017 (1) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submitted that the issue is squarely covered in favour of the assessee by the decision of Hon’ble Apex Court in the case of CIT vs. TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT ] for the proposition that writing of the debt in the profit and loss account and the books of account is sufficient for allowance of bad debt. We find ourselves principally in agreement with this proposition. However, this aspect needs factual verification of the books and hence we remit this issue to the file of the AO to examine the issue Disallowance of provision on account of overdue interest - Held that:- No addition is required for overdue interest on NPA. Learned CIT has clearly erred in directing that the same be brought to tax. In our considered opinion, learned CIT was not justified in exercising his power of revision qua this issue. Firstly the issue is covered in favour of the assessee by the decision as above. Secondly even if there were two views possible, the AO has adopted one of the views which cannot be said to be malafide or non acceptable. In such situation, exercise of jurisdiction by the learned CIT is not valid. This is supported by the Hon’ble Apex Court exposition in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had misplaced and mixed up the papers with other documents on her table and it had escaped from her attention to prepare appeal. Sometime in March 2016 she noticed that appeal has remained to be filed. The appeal was prepared and filed in the office of the Registrar of Income Tax Tribunal, Nagpur on 23/03/2016. Thus there is delay of 294 days in filing appeal before ITA T. The affidavit of Smt. Shruti Joshi working with the office of Shri V.S. Jadhao affirming the above facts is enclosed to substantiate the request for condonation of delay in filing of appeal. 2. It is respectfully submitted that delay in submission of appeal is on account of mistake at the office of counsel of assessee and there is no negligence on part of assessee or any malafide intention to delay the filling of appeal. The assessee is Co-operative Bank and is managed by elected Honorary Members. 3. The assessee places reliance on the decision of M/s. Raipur Ferro Alloys Private Ltd. in ITA Nos.103, 253 254/Nag/2001 vide order dated 30/04/2003 for condonation of delay in filing the appeal. 4. The assessee places reliance on the various decisions referred to in the aforesaid appellate order. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 5. Upon receipt of assessee s submission, learned CIT held as under : i) On the issue of debit of ₹ 10,000/- to the P L account on account of education fund, learned CIT noted the submission that the same has been paid to the State Federal Society and is a contribution towards the education fund modified in this behalf by the State Government. However, learned CIT noted that no evidence has been furnished. He remitted the matter to the AO and directed the assessee to make his submissions along with necessary evidence before the AO. ii) On the issue of contingency expenses of ₹ 2,58,127/- debited to the P L account, learned CIT noted the submissions that the same is an expenditure on unexpected/contingent events i.e. unforeseen events and certain miscellaneous expenses. On this issue also the learned CIT remitted the matter to the AO directing the assessee to make his submissions along with necessary evidences before the AO. iii) On the issue of debit of ₹ 89,26,118/-, learned CIT noted the assessee s submission that the same represents the interest receivable on loan account in respect of which the income is already credited to P L account. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the assessee s submissions are summarised as under : Ground No. 1 2: Jurisdiction u/s 263 of Income Tax Act, 1961. A) The Hon ble CIT has directed to make addition at ₹ 89,26,118/- being interest capitalized debited to Profit Loss A/c not allowable as deduction u/s 37(1) of I.T. Act, 1961 and has set aside the issue in respect to contribution of ₹ 10,000/- on account of Education Fund ₹ 2,58,127/- on account of Contingent Fund and ₹ 26,14,907/- on account of overdue interest on NPA advance. B) The AO had made complete inquiries as regards to expenditure claimed and had accepted the same in assessment framed u/s 143(3) of I.T. Act, 1961. The expenditure claimed is allowable deduction.AO has taken possible view of the matter. The order passed by AO cannot be termed as erroneous and prejudicial to the interest of revenue. Reliance on: i) (2007) 295 ITR 0282 (SC) CIT vs. Max India Ltd. C) The A.O. has completed the assessment proceedings uls 143(3) of I.T. Act 1961 and has allowed the expenditure of ₹ 10,0001- on account of Education Fund ₹ 2,58,127/- on account of Contingency Fund. The sum of ₹ 89,26,1181- represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is thus clearly allowable u/s 36(1)(vii) of I.T. Act, 1961. The requisite condition for grant of allowance stands satisfied on the basis sof evidence on record. Reliance on: i) 323 ITR 397 (SC) CIT vs. TRF Ltd. The issue in dispute as to claim of aforesaid sum squarely covers by the decision of Hon ble Apex Court and thus direction of Hon ble CIT to make addition of same at the hands of assessee is unjustified and unsustainable. E) CIT has observed that is is not allowable u/s 37(1) of I.T. Act, 1961. CIT has not recorded any finding that it is not allowable as bad debts. Entries in books clearly demonstrate that same is allowable as bad debt. 9. We have carefully considered the submissions and perused the records. 10. As regards the issue of debit of ₹ 10,000/- on account of education fund and debit of ₹ 2,58,127/- on account of contingency fund, we find that the learned CIT has observed that apparently expenditure appeared to be capital in nature. On assessee s not furnishing the necessary evidence of the expenditure being revenue in nature, learned CIT has remitted the matter to the file of the AO and directed the assessee to give his submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank are to be taxed or not. It was held that in a situation when the assessee is a Cooperative bank, however, governed by RBI guide lines then the provisions of section 43D is to be applied. Even the ITAT, Pune Bench in the case of Omerga Janta Sahakari Bank Ltd. 166 TTJ 375 has held that the assessee, a Cooperative bank, operating under the license from RBI and governed by the Circulars of Reserve Bank of India is entitled for relief. On the basis of those circulars, the said Cooperative Bank had not accounted for the interest income of NPA. It was held that interest income relatable to NPA was not includible on accrual basis since the interest income had not accrued to the assessee in that period. Both the Tribunals have also discussed a decision of Hon ble Supreme Court pronounced in the case of Southern Technologies Ltd. 320 ITR 577 (SC). The Hon ble Court has expressed that in essence RBI directions were prudential norms issued which deals essentially in respect of recognition of income. The guidelines were in respect of NBFCS to disclose the amount of NPA in their financial accounts. By virtue of section 45Q an overriding effect is given to said directions vis-a-vis princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets, including the interest income booked and debited to the account of respective borrower, and qua which the assessee is entitled to and has claimed deduction u/s 36(1)(viia) 8. An order of ITAT, Ahmedabad Bench has also been cited before us pronounced in the case of Karnavati Cooperative Bank 144 TTJ 769 (Ahd) wherein the identical issue has been dealt with at length and the CBDT Instructions have also been considered. It is also worth to mention that in this decision as well the case of Southern Technologies 320 ITR 577 (SC) has been discussed and followed. We have also noted that the decision of U.Co. Bank 237 ITR 889 (SC) was also discussed for the legal proposition that a beneficial Circular is not to be treated as inconsistent with the provisions of statute and binding on the authorities. According to the Hon ble Court, the interest in respect of sticky advances are to be taxed only when actually received as prescribed by CBDT Circular. 8.1 There is one more decision of ITAT, Bengalore Bench-B, Bengalore bearing ITA no.1528/Bang/1013 Asstt. Year 2009-10 order dated 13th of Feb., 2015 pronounced in the case of ACIT v/s. Bagalkot District Central Cooperative Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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