TMI Blog2018 (1) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistency in following the accounting principles by the assessee and therefore, derecognition of interest on NPAs is not something barred by the Income tax law. Thus we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition so made by the Assessing Officer. Thus, the sole ground of appeal raised by the Revenue is dismissed. - ITA No. 4228/DEL/2014 - - - Dated:- 22-1-2018 - SHRI B.P. JAIN, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEMBER For the Assessee : Shri Arvind Kumar, Adv For the Revenue : Shri Ravi Kant Gupta, Sr. DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, This appeal filed by the Revenue is directed against the order dated 15.05.2014 of Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of Rs. 1,35,95,558/- should not be treated as its income. As in the earlier years, the assessee company has submitted that as per the directions promulgated by the Reserve Bank of India, which is to be mandatorily followed by all the Non Banking Finance Companies is the prudential norm. Under these norms all the NBFCs are not to recognize any interest accruing on Non Performing Assets, under certain conditions and time period, and also derecognize the income so accrued and accounted for in the earlier years, if a particular asset turns out to be non performing. Thus, these directions not only prohibit the NBFCs from accruing the income on NPAs but also direct them to reverse the income so accrued in the past, in the year in which such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oans is taxable to income-tax on accrual basis where the assessee follows the mercantile system of accounting. Some State Financial Corporations have changed the method of accounting of interest from mercantile to cash basis. State Financial Corporations are governed by the directives of the Reserve Bank of India and IDBI. If these authorities are satisfied that the change in the system of accounting of interest from mercantile to cash basis by the concerned State Financial Corporation is legal, valid and bona fide, the Income-tax Department may accept the cash system of accounting of interest. 7. Accordingly, the NBFC, as in the present case, has to follow the directions of the CBDT and as per the decision of various courts, NBFC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of this, we humbly submit and request that the order of the Assessing officer be reversed and direct him to delete the disallowance. All the more this needs to be seen in the context of present day directions and the business and purpose of the company. Should be you need any further clarification, please do not hesitate to contact us or provide us another opportunity to explain. I have carefully examined the issue related to disallowance made by the AO on account of derecognized interest. From the appellant s submission dated 12.5.2014 it is seen that the very same issue has been decided in favour of the appellant by the Hon ble ITAT, Delhi in ITA No. 100 to 103/Del/2010 for the assessment years 2004-05, 2005-06,2006-07 and ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
