TMI Blog2017 (7) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... on actual receipts basis. Even otherwise, AS9 of ICAI on Revenue recognitions provide for, where there in uncertainty about the collection of Revenue, recognition of income or such Revenue is postponed to the extent of uncertainty involved, therefore, the assessee recognized Revenue on advances classified as NPAs on actual receipt basis and even the assessee consistently following the method of accounting in accordance with Section 145 of the Act. Therefore, on the aforesaid reasons and observations, we do not have any hesitation to uphold the action of the Ld. CIT(A) to dismiss the appeals of the Department. Hence, the instant appeals stand dismissed. - I.T.A. Nos.98 & 99(Asr)/2017 - - - Dated:- 14-7-2017 - SH.T.S. KAPOOR, ACCOUNTANT M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following mercantile system of Accounting. 4. It is prayed that the order of the Ld. Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored. 3. The brief facts of the case are that the assessee had filed return of income on 29.09.2012 declaring income of Rs.9,56,87,643/-. The same was revised on 06.10.2012 and net taxable income of Rs.5,71,88,616/- was declared. In the revised return, the income was reduced by an amount of Rs.3,84,99,024/- i.e., DICGC for earlier years paid during the year. The return was processed under section 143(1) of the Income Tax Act, 1961 and the Assessee s case was selected for scrutiny under CASS. Notice u/s 143(2) was issued to the assessee on 17.08.2013 which was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the Co-operative Bank does not fall within the preview and the assessee bank is not scheduled bank as defined in Explanation below section-43D section 43D such statutory provision in the Income Tax Act, 1961, regarding recognition of income from sticky loans and only the category of business concerned in Section 43D will be able to recognize interests on sticky loans on receipt basis. The assessee is not included in such the category of business or assessee u/s 43D, hence, it is required to account for interest on sticky loans on NPAs as it income. Even if it did not make any enquiries in its books of accounts for the interest NPAs, such interest would required to be accounted for as income. In the light of above discussion it is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on NPAs had to be accounted for as income on actual receipt basis. It is stated that master circular of RBI in respect of prudential norms on income recognition provide for income recognition on receipt of interest in respect of assets/loans under NPAs. It is also stated that AS-9 ICAI on revenue recognition provide for, where there in uncertainty about the collection of revenue, recognit ion of income or such revenue is postponed to the extent of uncertainty involved. In view of this posit ion, the appellant bank recognized revenue on advances classified as NPAs on actual receipt basis. The appellant has also submitted that method of accounting has been consistently fol lowed by the assessee as required u/s 145 of the IT Act. 4.5 Havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) in the case of Ms. The Jalandhar Central Co-operative Bank Ltd. in Appeal No. 66/14-15/CIT(A)/Jalandhar dated 19.09.2016 for the A.Y.2012-13 on the pretext that the Revenue has filed appeal against the order before the Hon ble ITAT which is till pending for adjudication. The Ld. Counsel drawn our attention to the order passed by the ITAT Circuit Bench at Jalandhar in ITA No.652(Asr)/2015 and ITA Nos.604 605(Asr)/2016 titled as ACIT, Circle-3, Jalandhar vs. M/s. The Jalandhar Central Co-operative Bank Ltd. Opp. GPO. Civil Lines, Jalandhar. Further the assessee s representative drawn our attention to the said order dated 20th January,2017 passed by the Circuit Bench by which the Circuit Bench allowed the appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artered Accountants of India. Section 45Q of the RBI Act provides, in the non obstante Clause with which it begins, that the provisions of the Chapter under which section 45Q falls, shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being inforce. 7. In M/s Vasisth Chay Vyapar Ltd. (supra), it has been held that when an NBFC classifies an asset as a Non-performing Asset in accordance with the directions issued the Reserve Bank of India, it is legitimate to infer that the interest income thereon is not accrued, even though the NBFC is following the mercantile system of accounting. Interalia, M/s Southern Technologies Ltd. (supra) has been distinguished in M/s Vasisth Chay Vyapar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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