2017 (2) TMI 399

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..... assets, this Tribunal is of the considered opinion that when the recovery of principal amount itself was doubtful, it cannot be said that the interest on such amount accrued to the assessee. Therefore, as per the system of accounting continuously followed by the assessee, the interest income on non-performing assets cannot be taken as income of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against revenue - I. T. A. Nos. 1525 and 1526/Mds/2016 - - - Dated:- 23-9-2016 - N. R. S. Ganesan (Judicial Member) And A. Mohan Alankamony (Accountant Member) For the Appellant : Supriyo Pal, Joint Commissioner of Income-Tax For the Resp .....

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..... Therefore, according to the learned Departmental representative, irrespective of the stand of the assessee that the accrued interest is not recognised, the same has to be treated as income of the assessee. On appeal by the assessee, the Commissioner of Income-tax (Appeals) found that the advance made by the assessee was treated as non-performing asset as per the prudential norms framed by the Reserve Bank of India for the purpose of recognising interest income. The Commissioner of Income-tax (Appeals) has also found that the assessee was recognising the interest income on receipt basis continuously in respect of non-performing asset. Therefore, as per Accounting Standard-9, the Commissioner of Income-tax (Appeals) found that there was unce .....

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..... r submitted that when the assessee could not recover the principal amount advanced and classified the same as non-performing asset, the interest on such amount could not be accrued at all. The very object of classifying the advance as non-performing asset is to indicate that no interest was accrued and the recovery of the principal amount itself is doubtful. According to the learned representative, as and when the assessee recovers the money together with interest, the same will be offered for taxation. In view of uncertainty in recovering the principal amount, according to the learned representative, the Commissioner of Income-tax (Appeals) has rightly found that there cannot be any addition. 6. We have considered the rival submissions .....

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