TMI Blog2018 (5) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv. For The Respondent : Ms. Jinita Chatterjee and S. Parthasarathi, Advs. JUDGMENT Ms. Jinita Chattarjee, learned counsel appearing for Shri S. Parthasarathi, undertakes to file power for the respondent. The Revenue seeks to maintain this appeal under Section 260-A of the Income Tax Act, 1961 ['the Act'] against the order dated 16.06.2017 as passed by the Income Tax Appellate Tribunal, Bengaluru ['the Tribunal], in ITA. No. 1276/Bang/2016, (relating to the Assessment Year 2010- 2011). The relevant background aspects of the matter are that the respondent-assessee is said to be a Co-operative Society, engaged in banking business. For the assessment year in question, the Assessing Officer proceeded to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Supreme Court has dismissed the SLP preferred in the case of Canfin Homes Ltd. (supra), but while keeping open the question of law involved in the case and as such, the same ought to have been considered by the Tribunal. It is submitted that as per amended Section 145 of the Act (with effect from 01.04.1997), the income under the heads 'profit' and 'gains of business or profession' has to be computed either under cash or under mercantile system of accounting and subject to accounting standards notified by the Central Government; and, therefore, in the present case, non-accrual of income on NPAs following mixed system of accounting was not permissible. Having heard learned counsel for the appellants and havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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. As is clear from the policy guidelines issued by the National Housing Bank, the income from non-performing asset should be recognised only when it is actually received. That is what the Tribunal held in the instant case. Therefore, the contention of the Revenue that in respect of non-performing assets, even though it does not yield any income as the assessee has adopted a mercantile system of accounting, he has to pay tax on the revenue which has accrued notionally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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