TMI Blog2016 (7) TMI 1605X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Bank Ltd. [ 2015 (3) TMI 886 - ITAT PUNE ] The Hon ble Bombay High Court in CIT Vs. M/s. Deogiri Nagari Sahakari Bank Ltd. [ 2015 (1) TMI 1218 - BOMBAY HIGH COURT ] has laid down the proposition that the interest accrued on NPAs is not taxable in the hands of assessee, in view of the guidelines issued by the RBI. Following the same parity of reasoning, we hold that no addition is warranted on account of interest accrued on NPAs. Accordingly, we uphold the order of CIT(A) in deleting the addition made on account of interest accrued on NPAs. The grounds of appeal raised by the Revenue are thus, dismissed. - ITA No.418/PN/2016 - - - Dated:- 4-7-2016 - MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM For the Appellant : Shri Ani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of banking and finance. The Assessing Officer during the course of assessment proceedings noted that the assessee had not credited the interest receivable or accrued on Non-Performing Assets (referred to as NPAs) to its Profit Loss Account for the captioned assessment year. The claim of the assessee in this regard was that in view of RBI guidelines, the said interest income on NPAs was to be recognized, but not to be offered to tax. However, the Assessing Officer was of the view that where the assessee was following mercantile system of accounting, the interest accrued on NPAs is to be added in the hands of assessee and addition to that extent was made in the hands of assessee. 6. The CIT(A) deleted the addition made by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 and material on record, we find that in Osmanabad Janta Sahakari Bank Ltd. (supra) the Tribunal has decided the issue in favour of assessee by observing as under: 7. In the case be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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