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TMI Blog2017 (6) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration. "(A)Whether Appellate Tribunal is right in law and on facts in confirming the order of the CIT(A) which held that assessee bank is not liable to be taxed on the notional interest on non performing assets based upon the accrual accounting theory and thereby deleting the addition of Rs. 1,16,77,000/- on account of accrued interest on NPAs? (B) Whether Appellate Tribunal is right in law and on facts in deciding that interest on NPAs is not taxable on accural basis without appreciating the fact that the Hon'ble Madras High Court in the case of CIT-Coimbatore v. Sakthi Finance Ltd. (2013) 352 ITR 102, following the decision of Hon'ble Supreme Court in the case of Southern Technologies Ltd. 320 ITR 577, has decided that the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if interest has been credited to Interest Suspense Account would be applicable in its case. The Assessing Officer brushed aside the submission based upon the circular of 1984, on the ground that the same is applicable only to banking companies and not to cooperative banks, on a misconception of law that a cooperative bank is not a banking company. In this regard it may be noted that the expression banking company has been defined under section 5(c) of the Banking Regulation Act, 1949 to mean any company which transacts the business of banking in India. Part V of the Banking Regulation Act bears the heading Application of the Act to Cooperative Societies. Section 56 thereof provides that the provisions of the Act, as in force for the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest being received on the NPAs. The Commissioner (Appeals) has placed reliance upon the decision of the Supreme Court in the case of Southern Technologies Limited (supra) and held that there is no merit in the contention of the assessee that under commercial accounting, interest on NPAs cannot be charged. On the question of applicability of the CBDT Circular dated 9.10.1984, the Commissioner (Appeals) held that the same would not be applicable for the reason that the provisions of section 43D of the Act are clear and cannot be overridden through delegated legislation viz. circulars and notifications. The Commissioner (Appeals) was further of the opinion that the statutory provisions were brought on the Act much later than the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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