2018 (10) TMI 1509 - HC - Income Tax

Reopening of assessment - non-deduction of tds on Interest accrued on non-performing assets - Held that - It could not be disputed by the learned counsel for the revenue that the similar issues came up before this Court in The Principal Commissioner of Income Tax-3, Ludhiana v. The Ludhiana Central Co-Op. Bank Ltd., Ludhiana 1986 (1) TMI 1 - SUPREME Court dismissed the appeal filed by the revenue.

Summary

Issues:
1. Addition of interest accrued on non-performing assets
2. Interpretation of Section 43D of the Income Tax Act
3. Application of Section 145 of the Income Tax Act

Analysis:
1. The appeal was filed by the revenue against the Tribunal's order deleting the addition of Rs. 2,67,88,000/- made by the Assessing Officer on account of interest accrued on non-performing assets. The primary question raised was whether the Tribunal was justified in deleting the said addition. The revenue contended that the Tribunal erred in ignoring the decision of the Supreme Court and the provisions of the Income Tax Act. However, the Tribunal upheld the deletion made by the CIT (A) and dismissed the revenue's appeal.

2. The second issue revolved around the interpretation of Section 43D of the Income Tax Act. The revenue argued that the scope of Section 43D was broadened for cooperative societies by the Finance Bill 2017, which should have been considered in the assessment. The Tribunal, however, upheld its decision to delete the addition, indicating that the provisions of Section 43D were not applicable in this case.

3. The third issue pertained to the application of Section 145 of the Income Tax Act concerning the assessee's hybrid system of accounting for sticky and non-sticky loans. The revenue contended that this approach was contrary to the provisions of Section 145. Despite this argument, the Tribunal accepted the assessee's accounting method and upheld the deletion of the addition. The High Court noted that similar issues had been addressed in a previous case involving the same respondent-assessee, where the appeal filed by the revenue was dismissed by the Court on similar grounds.

In conclusion, the High Court dismissed the present appeal by the revenue, affirming the Tribunal's decision to delete the addition of interest accrued on non-performing assets. The Court's decision was based on the interpretation of relevant provisions of the Income Tax Act and previous judicial precedents involving similar issues.