2018 (6) TMI 59 - AT - Income Tax

Addition of accrued interest on loans classified under non performing assets - Held that - This issue is squarely covered in favour of assessee by order of co-ordinate bench in assessee s own case for assessment year 2008-09 2013 (10) TMI 1291 - ITAT DELHI wherein held rightly held that overdue interest not realized during the year and credited to suspense interest account cannot be taken to be the income of the assessee. Thus the Ld. CIT (A) has thus rightly deleted the addition in question - there is no substance in the contention of the Ld. DR that the assessee was having no objection to this addition - Decided in favour of assessee Addition to provision created for CA audit fee - allowable expenditure - Held that - We find that the CIT (A) has given categorical finding that this expenditure has actually been incurred by the assessee. It is further seen that even the provision was created keeping in mind the audit fee prescribed by the NABARD and after taking into account the number of branches which the assessee was operating. Therefore, on this issue also there is no need for any interference by us. - Decided against revenue

Summary

Issues:
1. Taxation of interest income on NPA accounts.
2. Addition of dividend received from HARCO Bank.
3. Disallowance of provision for Standard Assets.
4. Disallowance of deduction claimed for Provision for Loss Assets.
5. Disallowance of provision created for CA audit fees.

Analysis:
1. The appeal pertains to the department challenging the order passed by the Ld. CIT (A) for the assessment year 2012-13. The AO added an amount to the income of the assessee on account of interest income on NPA accounts, dividend received from HARCO Bank, disallowance of provision for Standard Assets, deduction claimed for Provision for Loss Assets, and provision created for CA audit fees. The Ld. CIT (A) deleted certain additions, leading to the department filing an appeal before the ITAT.

2. The department contended that the Ld. CIT (A) erred in deleting the additions. The Ld. Sr. Departmental Representative supported the AO's findings. However, the Ld. Authorised Representative cited a previous ITAT order in the assessee's favor regarding accrued interest on NPA accounts. The ITAT had held that unrealized income should not be taken into the profit and loss account.

3. The ITAT, after considering the submissions, upheld the Ld. CIT (A)'s decision to delete the addition of accrued interest on NPA accounts and the provision for CA audit fees. The Tribunal noted that the issue was already settled in the assessee's favor in a previous ITAT order. The provision for CA audit fees was found to be in line with NABARD recommendations. Therefore, the ITAT dismissed the department's appeal, upholding the Ld. CIT (A)'s decision.

4. In conclusion, the ITAT dismissed the department's appeal, affirming the Ld. CIT (A)'s order. The judgment was pronounced on 30th May 2018, with the ITAT finding no grounds to interfere with the deletions made by the Ld. CIT (A) regarding the additions in question.