TMI Blog2018 (11) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... udgement of the Hon'ble Supreme Court in the case of UCO Bank Vs. CIT [1999 (5) TMI 3 - SUPREME COURT] and State Bank of Indore Vs. ITO [2002 (7) TMI 90 - MADHYA PRADESH HIGH COURT] and the decision of the coordinate bench in the case of S.N. Chitale [2010 (5) TMI 934 - ITAT INDORE], we direct the A.O. to delete the addition. - Decided in favour of assessee. - ITA No.15/Ind/2017 - - - Dated:- 2-11-2018 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member For the Appellant : Shri Manoj Fadnavis, AR For the Respondent : Shri V.J. Boricha, DR ORDER PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the CIT(A)-II, Indore dated 15.11.2016 pertaining to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest expenses. Ld. Counsel for the assessee reiterated the submissions as made in the written synopsis. The synopsis of the assessee is reproduced as under: 1. The Facts of the Case are mentioned on the Page 4 of the Order of Hon 'ble CIT(A). 2. The relevant portion of the assessment order is at Page 2 of the Order of Hon 'ble CIT(A) order. 3. The relevant para of the Demand report is reproduced at Page 3 of the Order of Hon 'ble CIT(A) order. 4. The finding of CIT (A) is at Page 7 of the order. 5. Following Pages of the paper book may kindly be perused:- a) Copy of Balance Sheet and Profit Loss A/c of M/S Karan Enterprises for A. Y. 2009-10 atPage 1 to 5 i. Details of the loans raised a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible under clause (a) of sub-section 2 of section 40A of the Act. 9. The Ld. AO has not considered that the loans Advance to M/S Karan Associates were given with the intension to earn interest. The interest earned in F.Y. 2005-06 has been offered to tax. 10. The Ld. AO has not considered the difference between not providing interest on sticky loans and interest free loans. It is not that interest free loans were given by the assessee. The present case relates to not providing interest on sticky loans. The recovery of principal arnount itself is doubtful. Legal proceedings are initiated against M/S Miakal Fiber Ltd. When the principal amount has become sticky, interest cannot said to accrue, both as per Tax Laws as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of State Bank of Indore vs. Commissioner of Income Tax (2002) 177 CTR (MP) 221 : (2002) 257 ITR 463 (MP) : (2002) 124 TAXMAN 725 Income-Accrual-lnterest on sticky loans- Credited to interest suspense account-Amount accrued but difficult to recoverand not in fact recovered-Not taxable in view of Circular No. F. 201/21/84-ITA-II dt. 9th Oct, 1984. 13. The above decision of Hon'ble Supreme Court is also been followed by High Court of Bombay in case of American Express International Banking Corporation vs. Commissioner of Income Tax(2002) 177 CTR (Born) 442 : (2002) 258 ITR 601 (Born) : (2002) 125 TAXMAN 488 Income-Accrual-lnterest on sticky loans and advances -Not taken to a/c -Not liable to be taxed -UCO Bank vs. CIT(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not providing interest on sticky loans and interest free loans. He submitted in the present case that it is not the case where the assessee has given interest free loans. Reliance is placed on the judgement of the Hon'ble Supreme Court rendered in the case of UCO bank Vs. CIT 237 ITR 889. Further reliance is placed on the judgement of Hon'ble M.P. High Court in the case of State Bank of Indore Vs. CIT 257 ITR 463. We find that these judgements are given in respect of the banking company. Admittedly, the assessee is not a banking company. Reliance is placed upon the decision of the Tribunal in the case of S.N. Chitale Vs. ITO in ITA No.310/Ind/2008, wherein the assessee had given loan to his father the A.O. had made addition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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