2014 (5) TMI 1225 - HC - Income Tax

Accrual of income - Derecognition of interest on accrual basis on Non-Performing Assets (NPAs) - HELD THAT - As the question of law is covered against the Revenue by two decisions i.e. CIT v. Vasisth Chay Vyapar Ltd. and Anr. 2010 (11) TMI 88 - DELHI HIGH COURT and DIT v. Brahmaputra Capital Finance Ltd. 2011 (5) TMI 321 - DELHI HIGH COURT Provision for doubtful debts for NPAs - As far as the second aspect goes we notice that the Revenue had succeeded before the ITAT in light of the judgment of the Supreme Court in Southern Technologies Ltd. 2010 (1) TMI 5 - SUPREME COURT - The Revenue is not in appeal in respect of that question. Following the decision in Vasist Chay Vyapar Ltd. (supra) and Brahmaputra Capital Finance Ltd. (supra) the question of law urged by the Revenue is answered against it and in favour of the assessee.

Summary

Issues:
1. Condonation of delay in filing applications.
2. Exemption applications.
3. Appeal against the order of the Income Tax Appellate Tribunal (ITAT) regarding derecognition of interest on Non-Performing Assets (NPAs) and provision for doubtful debts.

Condonation of Delay:
The judgment addresses the condonation of delay in filing applications related to the case. The court allows the applications for condonation of delay (C.M. Appl. 8108/2014, 8110/2014, and 8112/2014) based on the reasons mentioned in the applications. This decision indicates the court's consideration of the circumstances leading to the delay and its willingness to grant leniency in this regard.

Exemption Applications:
The court also deals with exemption applications (C.M. Appl. 8107/2014, 8109/2014, and 8111/2014) in the context of the appeals. These applications are allowed, subject to all just exceptions. The court's decision to grant exemption implies a recognition of certain valid reasons presented by the appellant for seeking exemption in the proceedings.

Appeal Against ITAT Order:
Regarding the substantive issue, the judgment pertains to three appeals filed by the Revenue challenging the ITAT's common order dated 23.11.2012. The ITAT's order dealt with two main issues: derecognition of interest on NPAs on accrual basis and provision for doubtful debts for NPAs. The court notes that the question of derecognition of interest is settled against the Revenue based on previous decisions like CIT v. Vasisth Chay Vyapar Ltd. and DIT v. Brahmaputra Capital Finance Ltd. In contrast, the Revenue succeeded before the ITAT on the provision for doubtful debts issue, supported by the Supreme Court's judgment in Southern Technologies Ltd. v. JCIT. As the Revenue did not appeal on the latter issue, the court rules against the Revenue on the derecognition of interest, following the precedents set by Vasisth Chay Vyapar Ltd. and Brahmaputra Capital Finance Ltd., thereby favoring the assessee in this regard. This analysis showcases the court's meticulous consideration of legal precedents and its application in deciding the appeal issues.