TMI Blog2021 (3) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... PA is not an income. We hold that the accrued interest on NPA is not chargeable to tax u/s. 43D r.w. Rule 6EA and we do not find any reason to interfere with the order of CIT(A) and accordingly it is justified. Thus, the grounds raised by the Revenue are dismissed. - ITA No. 269/PUN/2018 - - - Dated:- 16-3-2021 - R. S. Syal , Vice President And S. S. Viswanethra Ravi , Member ( J ) For the Appellant : Deepak Garg For the Respondents : Suhas P. Bora ORDER Per S. S. Viswanethra Ravi , JM This appeal by the Revenue against the order dated 09-11-2017 passed by the Commissioner of Income Tax (Appeals)-8, Pune ['CIT(A)'] for assessment year 2014-15. 2. The only issue is to be decided is as to whether the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Master Circular of RBI in respect of Prudential Norms. The assessee recognized interest income on advances classified as NPA on actual receipt basis, because the certainty of recovery of interest was not known to the bank as per the RBI Norms. The AO found the submissions of the assessee not acceptable and rejected the same. According to him the interest accrued on NPA has to be computed as per section 43D r.w. Rule 6EA and to be included in the profit and loss account recognizing the same as income of the assessee. He placed reliance in the case of Southern Technology Ltd. Vs. JCIT reported in 320 ITR 577 (SC) of Hon'ble Supreme Court and observed that the RBI guidelines or prudential norms issued by RBI are not intended to regulate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der law. Further, we note that the order passed by this Tribunal for A.Y. 2011-12 is also placed at Page No. 5 of the paper book wherein by placing reliance on the order of this Tribunal passed in various other assessees on identical issue come to such conclusion that accrued interest on NPA is not an income. For better understanding the relevant portion of order passed in assessee's own case for A.Ys. 2007-08, 2009-10 and 2012-13 is reproduced here-in-below: 6. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to considering interest on NPA accounts as income of the assessee. We find that identical issue of taxing of interest accrued on NPA accounts arose in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to be assessed on accrual basis u/s. 5 of IT Act for the reasons (i) benefits extended to schedule bank, public financial institutions, public companies for the purpose of section 43D were not extended to a co-operative bank and (ii) the assessee was following mercantile system of accounting and not cash system. Ultimately the Assessing Officer taxed on accrued interest of ₹ 25,20,022/- advance claimed to be NPA account. The matter was carried before the first appellate authority wherein, following the Osmanabad Janta Sahakari Bank Ltd. in ITA No. 795/PN/2011, the CIT(A) has decided the issue in favour of the assessee and the same has been opposed before us on behalf of revenue. 2.1 After going through the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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