9911796707
TMI Blog2013 (6) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... t) whether to be taxed in the hands of the assessee. As far as the order of the CIT(A) for A.Y.2007-2008 is concerned, the same was passed in compliance of an order of the ITAT dated 25.1.2011. The effective ground is ground no.1 for A.Y.2007-2008 which is reproduced below: "2.1 The ld. CIT(A) has grievously erred in law and on facts in confirming that the interest of Rs. 1,16,77,000 on NPAs provided by the appellant bank in accordance with the guidelines of RBI and recognized accounting practice had accrued and chargeable to tax. The ld.CIT(A) has failed to appreciate that there being no real income or actual receipts, the impugned interest was not liable to tax." 2. The assessment for A.Y.2007-2008 was made under section 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, the addition of Rs. 85,36,517/- was made. Being aggrieved, the matter was carried before the first appellate authority. 3. As we have noted, the present appeal is against an order of the CIT(A) which was passed in consequence of the order of the Tribunal. The learned CIT(A) has examined the provision of section 43D and held that in the light of the decision of Keshavji Ravji & Co. Vs. CIT, 183 ITR 1 (SC), the provision of the Act must not be whittled down by resorting to any interpretative process. He has, therefore, held that the financial institution should be a scheduled bank as prescribed under the Act. In his opinion, the assessee is a cooperative bank, hence do not qualify as a scheduled bank in terms of provision of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned authority clearly mentioning the status of the assessee-bank, and place the same before the AO. 6. Next is the question of the accrual of the interest on "NPA". Although a scheduled bank is required to follow the prudential norms issued by the RBI from time to time, but simultaneously for taxation purpose, the tax payer is required to follow the provisions of the I.T.Act. In this regard, we may like to mention that the ITAT, Ahmedabad in the case of Karnavati Co-op. Bank Ltd. Vs. DCIT, 134 ITD 486 (Ahd) has opined that in a situation where a cooperative bank had followed mercantile system of accounting, but neither credited interest in the profit & loss account nor offered for taxation, the amount of interest of "NPA" , in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e guidelines issued by the Hon'ble Madras High Court, needless to say after providing adequate opportunity of hearing to the assessee. Resultantly, the grounds raised by the assessee may be treated as allowed for statistical purpose. 7. In respect to A.Y.2009-2010, the ground no.1 and 2 are to be decided de novo as per the guidelines and discussion made hereinabove. 8. Now, we have left with ground no.3 reproduced below: "The ld.CIT(A) has grievously erred in law and or on facts in confirming the disallowance of deduction u/s.80P(2)(d) of Rs. 94,500 in respect of dividend income from co-op. banks." 9. During the year, the assessee had received dividend income from Ahmedabad District Cooperative Bank of Rs. 94,500/- and claimed as exem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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