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TMI Blog2018 (5) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are sought to be raised by this Court, under Section 260A of the Income Tax Act in the form of substantial questions of law arising out of the order of the learned Income Tax Appellate Tribunal are as under. 3. That the respondent-Co-operative Society engaged in the activities of Co-operative Bank for these Assessment Years in question failed to deduct tax at source under the provisions of Section 194A (1) of the Income Tax Act, 1961 from the interest paid to its member over Rs. 10,000/- during the said years and therefore a disallowance of such interest paid to the members without TDS, was liable to be made as per the provisions of Section 40 (a) (ia) of the Act. 4. Both the learned counsel at Bar fairly submitted that the said issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the section 194A(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co- operative society under section 194A(3)(v) of the Income-tax Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. As this amendment is effective from the prospective date of 1st June, 2015, the co-operative bank shall be required to deduct tax from the payment of interest on time deposits of its members, on or after the 1st June, 2015. Hence, a cooperative bank was not required to deduct tax from the payment of interest on time deposits of its members paid or credited before 1st June, 2015." In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoid payment of tax. But, if in his account it is clearly stated though a particular income is due to him but it is not possible to recover the same, then it cannot said to have been accrued and the said amount cannot be brought to tax. In the Instant case, we are concerned with a non-performing asset. As the definition of non-performing asset shows an asset becomes non-performing when it ceases to yield income. Non- performing asset is an asset in respect of which interest has remained unpaid and has become past due. Once a particular asset is shown to be a non-performing asset, then the assumption is it is not yielding any revenue. When it is not yielding any revenue, the question of showing that revenue and paying tax would not arise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l institution or the scheduled bank or the State financial corporation or the State industrial investment corporation to its profit and loss account for that year or, as the case may be, in which it is actually received by that institution or bank or corporation, whichever is earlier. Explanation.-For the purposes of this section,- (a) "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956); (b) "scheduled bank" shall have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36; (c) "State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank or] the State financial corporation or the State industrial investment corporation or the public company to its profit and loss account for that year or, as the case may be, in which it is actually received by that institution or bank or corporation, 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 3 of the Companies Act, 1956 (1 of 1956); (ii) whose main o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions or Schedule Banks. 11. Under Section 43D of the Act itself clearly provided that interest on such bad debts/doubtful debts cannot be taxed, unless the concerned Financial Institutions or Schedule Banks or Co-operative Banks credits such interest in its Profit and Loss Account for that year or actually receives such interest from the borrowers. 12. The purpose of such protection given to these Financial Instructions or Banks was not to allow taxability of the interest on bad debts/doubtful debts or Non-Performing Assets (NPA's) unless they actually received such interest income or such interest income was credited in their Profit and Loss Account by the concerned Financial Institution or the Schedule Bank or the Co-operative Banks aft ..... X X X X Extracts X X X X X X X X Extracts X X X X
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