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2015 (1) TMI 558 - AT - Income TaxRestricting the deduction to the extent of amount of provision made in the books, for bad and doubtful debt i.e. ₹ 58,00,000/- and there by disallowing deduction of ₹ 1,07,58,930/- - Held that - This issue stands decided against the assessee by the decision of the Tribunal in assessee s own case for the A.Y. 2008-09 - Decided against assessee. Interest on NPA accounts - CIT (Appeals) erred by adding amount of ₹ 64,66,409/-on account of interest on NPA accounts which is not recognized as income? - Held that - Following the decision of the Tribunal in assessee s own case in the immediately preceding assessment year and in the absence of any distinguishable feature brought on record by the Ld. Departmental Representative, the above ground by the assessee is allowed - Decided in favour of assessee. Premium amortised on HTM Securities - Held that - CIT(A) made no mistake in allowing the claim of the assessee for deduction of ₹ 51,95,263/- representing amortization of premium paid on Government Securities under the HTM category. Thus on this Ground also, Revenue fails - Decided in favour of assessee.
Issues Involved:
1. Deduction for bad and doubtful debts. 2. Addition of interest on Non-Performing Assets (NPA) accounts. 3. Deduction of premium amortized on Held to Maturity (HTM) securities. Issue-Wise Detailed Analysis: 1. Deduction for Bad and Doubtful Debts: - Ground of Appeal No. 1: The assessee challenged the CIT(A)'s decision to restrict the deduction for bad and doubtful debts to Rs. 58,00,000, disallowing Rs. 1,07,58,930. The assessee argued that the CIT(A) wrongly relied on CBDT Instruction No. 17 of 2008 for interpreting Section 36(1)(viia), which was beyond CBDT's power. - Tribunal's Decision: The Tribunal dismissed this ground, referencing its own decisions in the assessee's cases for A.Y. 2008-09 and 2009-10, where similar issues were decided against the assessee. 2. Addition of Interest on NPA Accounts: - Ground of Appeal No. 2: The assessee contested the addition of Rs. 64,66,409 as interest on NPAs, arguing that such interest was not recognized as income per RBI guidelines. The CIT(A) upheld the AO's addition based on CBDT Instruction No. 17/2008. - Tribunal's Analysis: The Tribunal noted that a similar issue was decided in the assessee's favor in the preceding year. It referenced the Tribunal's decision in the case of The Omerga Janta Sahakari Bank Ltd., which followed the Delhi High Court's ruling in M/s Vasisth Chay Vyapar Ltd. and the Madras High Court's ruling in CIT vs. Sakthi Finance Ltd. The Tribunal concluded that interest on NPAs should not be taxed on an accrual basis, favoring the assessee. - Conclusion: The Tribunal allowed this ground, consistent with its previous decisions. 3. Deduction of Premium Amortized on HTM Securities: - Ground of Appeal No. 3: The assessee sought a deduction of Rs. 32,98,348 for premium amortized on HTM securities, which was not claimed in the return but was raised during assessment. The CIT(A) rejected this claim, citing a lack of details. - Tribunal's Analysis: The Tribunal found that a similar issue was decided in the assessee's favor in the preceding year. It referenced the CIT(A)'s decision, which was upheld by the Tribunal, allowing the deduction for amortized premium based on RBI guidelines and CBDT instructions. - Conclusion: The Tribunal allowed this ground, following its previous decision in the assessee's case. Final Outcome: - The appeal filed by the assessee was partly allowed, with the Tribunal dismissing the ground related to the deduction for bad and doubtful debts but allowing the grounds related to the interest on NPAs and the premium amortized on HTM securities. Pronouncement: - The judgment was pronounced in the open court on 9.12.2014.
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