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TMI Blog2013 (9) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit which has already suffered the tax. In our opinion, as rightly held by the Ld.CIT(A), the provisions of section 41(1) are not applicable to the issue before us as the said provision operate in the different situation TDS provisions not applicable in case the payment already made before 31-03-2009 - Held that:- This ground is to go against the assessee by the decision of the Hon’ble High Court of Kolkata in CIT Vs. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] in which the decision of the Hon’ble Special Bench of the Tribunal in Merilyn Shipping and Transport [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] has been reversed. X X X X Extracts X X X X X X X X Extracts X X X X ..... hi 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 non-scheduled 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 analysis of this section our first observation is that Section 43D is in contrast with the fundamental principle of accountancy. The cardinal principle of mercantile system of accountancy is that an income is to be shown in the books of account on accrual basis. The principle is that it is immaterial whether it was actually received or not, but if an income is expected to be received, then it sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccruing 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 56 ITR 198(SC) and K.P.Varghese 131 ITR 597 (SC). In the land-mark decision, the Hon'ble Supreme Court in the case of UCO Bank vs. CIT (1999) 237 ITR 889 (SC) has therefore held, first, that a beneficial circular is not to be treated as inconsistent with the provisions of statute and binding on the authorities. Second, that in respect of interest on "sticky advances" interest income is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any 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 similar context. To say that the court could not resort to the so-called "equitable construction" of a taxing statute is not to say that, where a strict literal construction leads to a result not intended to subserve the object of the legislation, another construction, permissible in the context, should not be adopted. In this respect, taxing statutes are not different from other statutes." We can the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 intended for taking the interest income accrued as per section 5 out of the scope of the Act. If the contention of assessee was accepted, it would amount to insertion of 'NBFC' in section 43D, that too by a Guideline issued for different purposes by an authority other than the Parliament In other words, the doctrine of 'Casus Omissus' will deem to have been applied which is contrary to law o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 of lease, finance and hire purchase and that the principle of accrual comes into play without income was recognized and that the assessee had classified its assets on the basis of notification issued by R.B.I. and found that certain assets came under the category of NPA and that from such NPA the assessee had not recognized any income in consonance with the notification issued by RBI and AS-9 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olden Transport Co. Ltd., 249 ITR 723 (Raj.) (4) CIT Vs. Aries Advertising Pvt. Ltd. 255 ITR 510 (Mad.) 6.1 The AO finally made addition. Matter was carried before the Ld.CIT(A) by the assessee. The assessee contended before the Ld.CIT(A) that the Assessing Officer has not appreciated that the dividend liability has arisen on account of decision of the Board of Directors to distribute the profit to the shareholders and the profit which is being distributed is already added to tax. The assessee has never claimed the dividend payable or paid as deduction while computing the income. The payment of dividend is related with distribution of profit, out of profit and loss appropriation account and therefore same is already subjected to tax in the past and cannot be taxed again. The assessee further contended that the provisions of section 41(1) operates in the different field and same are not applicable when the dividend is forfeited. 6.2 The assessee also distinguished the decisions relied on by the AO in the case of T.V. Sunderam Iyenger and Sons (Supra), Solid Containers Ltd. (supra). The Ld.CIT(A) accepted the plea of the assessee. The Ld.CIT(A) explained the decisions relied on by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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