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TMI Blog2015 (2) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount has been offered to tax in earlier years, no details or break up has been placed before us to demonstrate as to when the interest was offered to tax in earlier year. We also find that A.O has also not given any finding about as to when the amounts was claimed by the assessee as deduction and therefore the amount claimed by the Assessee is double deduction. We are therefore of the view that the issue needs re-examination. Restore the issue back to the file of A.O to decide the issue afresh - Decided in favour of assessee for statistical purposes. Disallowance of certain expense - Held that:- A.O had disallowed the expenses for the reason that the Assessee could not explain the discrepancy between the amount appearing in the ledger and its Profit and Loss account. On the other hand we further find that CIT(A) has restricted the disallowance to 20% but while restricting the disallowance to 20%, there is no finding of CIT(A) about the discrepancy which has not been explained by the Assessee. In view of the aforesaid facts and the contentions of the ld. A.R, we are of the view that in fairness, the matter needs to be re-examined and we therefore restore the issue back to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Expenses of ₹ 6.34.904/-, Consultancy Fee Exp. of ₹ 7,64,000/-, Building Maintenance Exp. of ₹ 29,168/-, Office Exp. of ₹ 5,67,460/-. 1st ground is with respect to addition on account of unrealizable interest on non performing advances. 3. During the course of assessment proceedings, A.O noticed that though the Assessee was following mercantile system of accounting, the interest on non- performing assets (NPA) accounts were not offered to tax. A.O was of the view that interest on NPA accounts was required to be calculated on accrual basis and therefore should have been offered to tax. The Assessee was asked to justify its claim to which Assessee interalia submitted that Assessee being a bank was governed by regulations prescribed of Reserve Bank of India (RBI), no interest could be recognized in respect of non performing assets unless the same is actually realized. The submission of the Assessee was not found acceptable to the A.O as he was of the view that the RBI Act and the Income Tax Act operate in altogether different fields. He was further of the view that Income Tax Act being a special act so far as computation of tax liability was concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only then the same could not be taken as income but in the case of the appellant, merely by giving the loans in terms of sticky loans by following a particular banking norm, it cannot be said that the amounts had become unrealizable. Thus, in view of the aforesaid discussion and considering the entire facts of the case, I am of the considered view that the Assessing Officer was justified in making the addition of ₹ 67,21,070/-. The addition is hereby confirmed. The ground of appeal fails. 4. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 5. Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A) and further submitted that Assessee being a bank, was governed by regulations of RBI and it was following the prudential accounting norms prescribed by RBI. He further submitted that the present method of accounting has been consistently followed by the Assessee and has also been accepted by the Revenue. He further submitted that for the purpose of taxation the real income theory has to be considered. He further placed reliance on the decision in the case of CIT vs. Gujarat Apollo Industries Ltd. (2014) TIOL-2018-HC-Ahm-IT. He also plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks. The adopted accounting policy i.e. recognizing income on NPA accounts only subject to realization does not serve as a standard category. 7. In the present case before us, neither of the parties have placed material on record to demonstrate that the verification of accrual of interest has been decided on the basis of examination of each account and in the line with the guidelines laid down by the aforesaid decision of Hon ble Madras High Court. We therefore respectfully following the decision of Hon ble Madras High Court in the case of Sakthi Finance Ltd. (supra) are of the view that the accrual of interest is a matter of fact which needs to be decided on the basis of examination of the status of each party. We therefore restore the issue back to the file of A.O to decide the issue de novo in the light of the guidelines issued by Hon ble Madras High Court in the case of CIT vs. Sakthi Finance Ltd. (supra), the guidelines prescribed by R.B.I and in accordance with law. Needless to state that A.O shall provide adequate opportunity of hearing to the Assessee. The Assessee is also directed to cooperate by promptly furnishing all the required details called for by the A.O to dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been offered to tax in earlier years, no details or break up has been placed before us to demonstrate as to when the interest was offered to tax in earlier year. We also find that A.O has also not given any finding about as to when the amounts was claimed by the assessee as deduction and therefore the amount claimed by the Assessee is double deduction. We are therefore of the view that the issue needs re-examination. We therefore restore the issue back to the file of A.O to decide the issue afresh and give a categorical finding as to when the amount was claimed by Assessee in earlier years and also when it was allowed as deduction. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. The Assessee is also directed to furnish all the required details promptly to A.O so as to enable him to decide the issue. In the result, this ground of Assessee is allowed for statistical purposes. Ground no. 3 is with respect to disallowance of certain expense. 12. During the course of assessment proceedings, A.O noticed that Assessee had debited advertisement expenses (Rs. 6,34,904, Consultancy Fees ₹ 7,64,000/- Building maintenance ₹ 29,168/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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