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TMI Blog2013 (12) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in law the Ld. CIT(A)-Kolhapur was justified in confirming the addition made of ₹ 5,79,83,094/- by the A.O. being the estimated accrued interest on NPAs? Even ignoring the jurisdictional judgment of the Tribunal? Whether the CIT(A) ought to have followed the jurisdictional Tribunal judgment which was binding on him in view of Apex courts judgment? 2) Whether on the facts and circumstances of the case and in law the judgment of the other co-ordinated Benches of the Tribunal and also other High Court judgments were not binding on the authorities below? Whether the Ld. CIT(A) breached the principles of judicial propriety in not following the various judicial verdicts relied upon before him and also included in the written submissions placed before him? 3) Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was correct in not discussing the issue in his appeal order and simply relying on an appeal order in the case of this appellant pertaining to A. Y. 2010-11? Whether his appellate order breached the provisions of S. 250(6) of the Act? 4) On the facts and circumstances of the case and in law and in view of the ground Nos. 1 to 3 above the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was noticed by the Assessing Officer that assessee did not include the interest of ₹ 18,26,306/- on the NPA advances. Again the issue of applicability of section 43D was considered to the non-scheduled banks. The Tribunal placed its heavy reliance on the decision of the Hon ble High Court of Delhi in the case of Vashist Chay Vyapar Ltd. [330 ITR 440 (Del.)], in which the Hon ble Delhi High Court has considered the decision in the case of Southern Technologies Ltd. [320 ITR 577 (SC)]. The Tribunal finally held that the interest income relatable to NPA advances did not accrue to the assessee. 6. An identical view has been taken by the ITAT, Ahmedabad Bench in the case of Karnavati Cooperative Bank Ltd. Vs. Dy.CIT [134 ITD 486 (Ahmedabad)]. In the case of Karnavati Cooperative Bank Ltd. (supra), the Tribunal has considered the provisions of section 43D and its application to the nonscheduled banks. The reasons given by the Tribunal in the case of Karnavati Cooperative Bank Ltd. (supra) for holding that interest on the sticky advances/NPA advances cannot be brought to tax by following the decision in the case of UCO Bank (supra), which is as under: 15.1. On careful anal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43-D are to be applied. (iii) Applicability of CBDT Circular. Next issue is that whether a Circular having effect of relaxing rigour of law can be treated as inconsistent with the provisions of a statute. In order to aid proper determination of the income of money lenders and banks, the Central Board of Direct Taxes has issued a Circular dated October 6, 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, it need not be included in assessee s taxable income, provided the Income tax Officer is satisfied that recovery is practically improbable. The CBDT u/s.119 of the I.T.Act has power to issue Circulars in exercise of its statutory powers. If the Board consider it necessary to lay down certain Rules and then direct the sub-ordinate authorities, such directions are required to be followed and such Circular would be binding on the Department unless and until held as ultra vires by a court of law. The Board has powers to relax the severity or the strictness of law and the authorities are required to follow those instructions as held in the case of C.B. Gautam vs. Union of India 108 CTR 304 (SC) 110 CTR 179 (SC); Navnitlal C.Zaveri 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if the statute has used the terminology for the chargeability of interest on the basis when credited or actually received , then in our opinion no ambiguity has been left by the Statute. If the statute is so clear that an interpretation can easily be made, then that exact meaning should be given to the language of the Section. For this legal proposition we place reliance on Keshavji Ravji and Company vs. CIT 183 ITR 01 (SC), wherein it was held as under: As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is other-wise unambiguous. If the intendment is not in the words, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature. When words acquire a particular meaning or sense because of their authoritative construction by superior courts, they are presumed to have been used in the same sense when used in subsequent legislation in the same or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This benefit was extended with effect from 1- 4-2000 in the case of public companies engaged in longterm financing of housing projects approved by National Housing Banks. The Legislature in their wisdom did not extend the same benefit to NBFCs which has been given to scheduled banks, public financial institutions, etc. The provisions of section 43D as stood at relevant time contained an expression 'the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed having regard to the Guidelines issued by the RBI in relation to such debts'. This expression continues to exist in the newly substituted section 43D applicable with effect from 1-4-2000. This shows that the RBI Guidelines in respect of scheduled banks, public financial institutions etc., were not sufficient for recognition of income on cash basis for the purposes of income-tax. The income of such assessees was determined as per circular dated 9-10-1984. Because of this reason, section 43Dwas inserted in the statute. RBI Guidelines in case of NBFC are for the purpose of control and supervision with respect to public interest and viability of the NBFC. The Guidelines never in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d loss account under the Reserve Bank Directions of 1998 is only a notional expense and, therefore, there would be add back to that extent in the computation of total income under the Incometax Act. Therefore the distinction can easily be drawn that in the appeal before us the question is accrual of interest income on sticky loan but in this cited decision the question before he Apex court was about the admissibility of provision made in respect of doubtful debts. (vi ) Concept of real income approved in the case of banking business: Before us, the theory of real income has also been argued and in support a decision of Hon'ble Court pronounced in the case of CIT vs. Godhra Electricity Co. 225 ITR 746 (SC). In short, the view expressed was that if income does not result at all, there cannot be any tax and that if an income has not materialized, then merely an entry made about a hypothetical income by following book keeping methods, the liability to tax cannot be attracted. Now at present the situation is that the Hon'ble Madras High Court in the case of CIT vs. Elgi Finance Ltd. 293 ITR 357 (Mad.) has taken a view that the assessee is a company engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses of premium paid on purchase of Govt. securities. At the outset, the Ld. AR pointed out that this issue is covered by the order of ITAT Pune Bench in ITA No.449/PN/2012 and CO No.130/PN/2013 order dated 05- 08-2013 wherein vide para 10 the issue has been decided in favour of the assessee by observing as under : 10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find an identical issue had come up before the Tribunal in the case of Nahsik Merchant Cooperative Bank Ltd. (Supra). We find the Tribunal has discussed the issue and dismissed the grounds raised by the Revenue by holding as under : 4. After going through rival submissions and material on record we find that with the advent of section 80P(4) w.e.f. A.Y. 2007-08 has closed the doors for cooperative banks for claiming the benefit of deduction u/s.80P(2)(a)(i) from this total income. However, the cooperative society should now be entitled to be assessed as normal banking company. The clause (4) inserted in section 80P has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. HTM These are carried at acquisition cost unless the cost is more than the face value, in which case the premium should be amortised over the period remaining to maturity. The premium is required to be amortised over the period remaining to maturity. This apart, any permanent diminution in value shall FV shall go on to reduce cost of the investment. 2. AFS The individual scrips in the Available for Sale category will be marked to market at quarterly or at more frequent intervals. These investments are considered to form stock-in-trade of a bank and therefore are to be valued at cost or NRV, whichever is less. Fall in value below cost, therefore, is to be provided immediately, however any net appreciation in value is ignored and not recognized as income on the basis of conservatism. 3. HFT The individual scrips in the Held for Trading category will be marked to market at monthly or at more frequent intervals and provided for as in the case of those in the Available for Sale category. 7. In para (vii) of the CBDT Inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed. 4.1 Nothing contrary was brought to our notice on behalf of Revenue. Facts being similar, so following same reasoning the Assessing Officer is directed to aloe claim of ₹ 5,67,456/- as deduction of Amortization expenses of premium paid on purchase of Govt. securities. 5. Next issue is with regards to disallowance of ₹ 8,650/- made by the AO on account of depreciation. The Ld. AR did not press the same, so same is dismissed as not pressed . The last issue is with regard to levy of interest u/s.234B of ₹ 67,22,066/- which is consequential. The Assessing Officer is directed accordingly. 6. In ITA No.2068/PN/2013 for A.Y. 2010-11 the assessee has filed the appeal on following grounds : 1) Whether on the facts and circumstances of the case and in law the Ld. CIT(A)-Kolhapur was justified in confirming the addition made of ₹ 5,38,53,061/- by the A.O. being the estimated accrued interest on NPAs? Even ignoring the jurisdictional judgment of the Tribunal? Whether the CIT(A) ought to have followed the jurisdictional Tribunal judgment which was binding on him in view of Apex courts judgment? 2) Whether on the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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