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Issues involved:
The judgment involves issues related to the addition of interest accrued on Non-performing assets u/s 43D read with Rule 6EB for the assessment years 2007-08 and 2008-09, and the disallowance u/s 14A for the assessment year 2008-09. Assessment year 2007-08: The assessee contested the addition made to the returned income by the Assessing Officer, arguing that interest on Non-performing assets should be calculated based on National Housing Bank guidelines rather than Rule 6EB. The A.O and CIT(A) upheld the addition, citing Rule 6EB. The Tribunal, based on previous decisions, rejected the assessee's claim, emphasizing that real income theory does not override the provisions of Sec. 43D. The Tribunal concluded the issue against the assessee. Assessment year 2008-09: The assessee challenged the addition made by the Assessing Officer on the grounds of expenditure in relation to exempt income and interest accrued on non-performing assets. The A.O considered a 24-month period for bad debts, which was incorrect under Rule 6EB. The Tribunal set aside this issue for the A.O to apply the correct provisions. Regarding disallowance u/s 14A, the A.O applied Rule 8D, leading to a disallowance. The Tribunal directed a proper inquiry into the disallowance of interest attributable to exempt income, as no new investments were made during the year. The issue was set aside for further examination by the Assessing Officer. In conclusion, the appeals for the assessment year 2007-08 were dismissed, while for the assessment year 2008-09, the appeal was partly allowed for statistical purposes.
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