TMI Blog2016 (12) TMI 1709X X X X Extracts X X X X X X X X Extracts X X X X ..... 28/06/2016 and it pertains to the Assessment Year 2012-13. 2. The assessee is admittedly a Co-operative bank, carrying on the business of banking. It is undisputed that certain loans were declared as Non Performing Assets (herein after referred to as NPA) in the assessee s books. Consequent there to, interest receivable to the tune of ₹ 2,58,279/- was also not shown as amount receivable, on accrual basis. According to the A.O. as well as CIT(A), the provisions of Sec. 43D of the Act carves out an exception to the schedule banks: assessee being a non-scheduled Cooperative bank, interest receivable on NPAs is assessable to tax on accrual basis. 3. The case of the assessee before the A.O. as well as the CIT(A) was that interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2016), wherein the bench referred to catena of decisions and decided in favour of the assessee by observing as under: 11. From the rival submissions advanced by the learned counsel for the respective parties, it is evident that there is no dispute that the RBI Guidelines are applicable to the assessee. It is the case of the assessee that in view of the RBI Guidelines, it cannot charge interest on accrual basis and that following the theory of the real income, taxabil ity of any notional income like accrued interest on NPAs would not arise. It has also been contended that even otherwise in view of the CBDT Circular bearing F No.201/21/844- ITA-II dated 09-10-1984, interest on accrual basis is not taxable if not received for three years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income only in the year of receipt. Even if it is assumed that there are two views possible, as per the decision of the Hon ble Supreme Court in the case of CIT Vs Vegetable Products Ltd., (1973) 88 ITR 192 (SC), a view which is favourable to the assessee has to be taken and thus he strongly submitted that the addition made by the A.O, and confirmed by the CIT(A), is not in accordance with law. 8. The Ld. DR, on the other hand, submitted that the provisions of the RBI Act are subservient to the provisions of Sec 43D of the income tax Act and thus strongly relied upon the orders passed by the taxing authorities. 9. We have carefully considered the rival submissions and perused the record. The arguments advanced by the assessee are f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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