TMI Blog2019 (7) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer himself in paragraph 1 of the assessment order dated 29.12.2006. In any event, we are concerned with the assessment year 2004-05 and what is required to be seen is whether the assessee has got non-performing asset in terms of the definition in the notification issued by Ministry of Law, Justice and Company Affairs dated 26.07.2001. Needless to state that the applicability of the said notification can also be considered while undertaking such an exercise. For the above reasons, the appeal filed by the assessee is allowed - Tax Case Appeal No.1321 of 2009 - - - Dated:- 3-7-2019 - Mr. Justice T.S. Sivagnanam And Mrs. Justice V. Bhavani Subbaroyan For the Appellant : Mr.Vijayaraghavan, for M/s.Subbaraya Aiyar, Padamanabhan Ramamani For the Respondent : Mr.J.Narayanaswamy, Senior Standing Counsel JUDGMENT T.S.SIVAGNANAM, J. This appeal, by the appellant/assessee under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as the Act ), is directed against the order dated 29.05.2009, passed by the Income-tax Appellate Tribunal Chennai Bench 'D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT vs. India Equipment Leasing Ltd., reported in (2007) 293 ITR 0350. 7.To be noted that the said decision pertains to an assessment for the year 1994-95. The circulars issued by the Reserve Bank of India in exercise of power conferred under Section 45JA of the Reserve Bank of India Act, 1934, have been revised/superseded from time to time. At the relevant point of time, the circular which was taken note of by the Division Bench in India Equipment Leasing Ltd. (supra) was not issued by the Reserve Bank of India, but by the Central Board of Direct Taxes (CBDT) in circular dated 09.10.1984, and the said circular stated that interest on self-performing assets is to be excluded from income, if such interest is not received for three years. 8.In 1998, the Reserve Bank of India issued a circular under Section 45JA of the Act. The said provision empowers the Reserve Bank of India to give directions to all or any of the non-banking financial companies relating to income recognition, accounting standards, making of proper provision for bad and doubtful debts, capital adequacy based on risk weights for assets and credit conversion factors for of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irection issued by the Reserve Bank of India dated 31.01.1998 was in vogue and held the field. That apart, the Ministry of Law, Justice and Company Affairs issued a notification dated 26.07.2001, in exercise of the powers conferred under Section 637 A(1) of the Companies Act, 1956. Clause (5) of the notification defines non-performing asset which reads as follows:- (v) Non-performing asset will be that borrowal account where interest income and / or instalment of loan towards repayment of principal amount remained unrealised for 12 months. In the above circular, the period stipulated is 12 months. 13.The learned counsel appearing for the appellant would accept the fact that the assessee being a mutual benefit fund society, the notification issued by the Ministry of Law, Justice and Company Affairs, dated 26.07.2007, is to be applied to the assessee's case. The Tribunal took note of the finding recorded by the CIT(A) and observed that there is no material placed by the assessee to show that certain accounts have become sticky. 14.The CIT(A) in paragraph 4.1 of its order records that in the light of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Equipment Leasing Ltd. (supra), could not have been applied to the facts of the present case. 18.The Tribunal has referred to the assessee's own case for the assessment year 2003-04 passed by the CIT(A). However, the said decision has been reversed by the Tribunal by order dated 30.10.2008. The Tribunal has also referred to the decision of this Court in the case of T.N.Power Finance and Infrastructure Development Corporation Ltd. vs. JCIT T.C.Nos.1012 and 1013 of 2005, dated 26.10.2005. The said case arose out of a case arising under Section 36(1)(vii) of the Act. In the said case, the Court referred to the decision of the Commissioner (Appeals) who appears to have held that the direction issued by the Reserve Bank of India cannot override the mandatory provisions of the Income-tax Act contained in Section 36(1)(viia) which stipulate for deduction not exceeding 5% of the total income only in respect of provision for bad and doubtful debts which are predominantly revenue in nature and not for provision for non-performing assets which are of predominantly capital in nature or trade related and not for provision for non-performing asset ..... X X X X Extracts X X X X X X X X Extracts X X X X
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