TMI Blog2024 (1) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... ve being a question of law where so decided by the Hon ble Jurisdictional High Court is binding on all the authorities under its jurisdiction and we see no reason but to respectfully follow the said decision. In the instant case, it is not in dispute that the assessee is a Co-operative Bank and covered under Non Scheduled Bank as per the Banking Regulation Act, 1949 and therefore, the amendment brought in by the Finance Act, 2017 which has been held to be retrospective in nature applies in the case of the assessee. Thus the addition so made by the AO and confirmed by the ld. CIT(A) is hereby set aside. Appeal of assessee allowed. - SHRI A.D. JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER For the Appellant : Shri Vishal Mohan, Sr. Advocate with Shri Aman Singhi, CA For the Respondent : Shri Dharam Vir, JCIT, Sr. DR ORDER PER VIKRAM SINGH YADAV,A.M. These are two appeals filed against the respective orders of CIT(A) NFAC, Delhi dated 16.05.2023 and 17.05.2023 pertaining to assessment year 2013-14 and 2014-15 respectively. Since common issues are involved, both these appeals were heard together. 2. With the consent of both the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 145 wherein it was provided that under the RBI guidelines and the Indian Companies Act, the banks have to follow the mercantile system of accounting and prepare accounts on accrual basis and the AO should ensure that the system is strictly followed by the banks. It was further held by the AO that the decision of the Hon'ble Supreme Court in the case of UCO Bank does not support the case of the assessee as the assessee is a Non Scheduled Bank whereas the UCO Bank was a Scheduled Bank and Scheduled Bank has been specifically given the privilege of accounting their interest income from NPAs in the year in which such interest income is received in terms of Section 43D of the Act. It was held by the AO that the benefit of Section 43D was extended w.e.f. 01.04.2000 in case of public companies engaged in long term financing of housing project approved by National Housing Bank, however, the legislature in its wisdom did not extend the same benefit to co-operative banks as has been given to the Scheduled Banks, Public Financial Institutions etc. Accordingly, the AO held that since the assessee bank is regularly following the mercantile system of accounting, the interest due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the ld. CIT(A) that in case of Pr. CIT Vs Kangra Central Co-operative Bank (ITA No. 82 83 of 2018), the Hon'ble Himachal Pradesh High Court vide its decision dated 07.12.2022 has decided the matter in favour of the assessee holding that the provisions of Section 43D are curative in nature and therefore, the amendment brought in w.e.f. 01.04.2018 have to be treated as retrospective in nature. 5. The ld. CIT(A) considered the submissions so made by the assessee, however, confirmed the finding of the AO holding that the assessee co-operative society cannot be given the benefit of retrospective applicability of Section 43D of the Act. As per the ld. CIT(A), the amendment in Section 43D w.e.f. 01.04.2018 nowhere mentions the term shall be deemed always to have meant , or shall be deemed never to have included which is a strong indicator of retrospective operation of Statute. Further, referring to the decision of Hon'ble Himachal Pradesh High Court, it was held by the ld. CIT(A) that the amendment in Section 43D was brought to provide level playing field to the Co-operative Banks vis- -vis Scheduled Bank. It was stated by the ld CIT(A) that with due respect and hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence was drawn to the decision in case of DCIT Vs Jogindra Central Co-operative Bank ITA No. 290/CHD/2020 dated 08.06.2021 wherein the matter has again been decided in favour of the assessee which is also a case of a Co-operative Bank engaged in banking activities and covered under Non Scheduled Bank as defined in Banking Regulation Act, 1949. It was, accordingly, submitted that the matter is squarely covered in favour of the assessee by the decision of the jurisdictional High Court as well as the Co-ordinate Benches and therefore, following the same, necessary relief may be provided to the assessee. 9. Per contra, the ld. DR submitted that at the time of passing of the assessment order on 28/01/2016, Section 43D did not refer to Non Scheduled Banks and only referred to Scheduled Banks, however, by Finance Act, 2017, Co-operative Banks were also included in the definition of Section 43D w.e.f. 01.04.2018. It was submitted that at the time of passing of the Finance Bill, it was specifically stated that the amendment will take effect from 01,04,2018 and will mainly apply in relation to assessment year 2018-19 and subsequent years. It was, accordingly, submitted by the ld. DR that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents relied upon by the learned counsel for the appellant, but in view of the decision given by the Hon'ble Supreme Court in Allied Motors' case supra, we are of the opinion that the view taken by the Tribunal that the assessee was required to tax the interest on the sticky loans/NPAs on receipt basis, is liable to be upheld. 12. The Hon ble High Court held that although the amendment in section 43D was sought to be made effective w.e.f 1/04/2018 but it was liable to be treated as retrospective in nature and has upheld the view taken by the Tribunal that the assessee was required to tax the interest on the sticky loans/NPAs on receipt basis. We, therefore, find that the matter is squarely covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court. The amendment whether to be read as retrospective or prospective being a question of law where so decided by the Hon ble Jurisdictional High Court is binding on all the authorities under its jurisdiction and we see no reason but to respectfully follow the said decision. In the instant case, it is not in dispute that the assessee is a Co-operative Bank and covered under Non Scheduled Bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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