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TMI Blog2018 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals). 2. The brief facts of the case as emanating from records are: The assessee is a Co-operative Bank. During the course of scrutiny assessment proceedings, the Assessing Officer inter alia disallowed interest on Non-Performing Assets (NPAs) amounting to ₹ 5,74,82,647/- claimed by assessee. Aggrieved by the assessment order dated 09-02-2015, the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) following the order of Tribunal in assessee s own case for assessment year 2010-11 in ITA No. 1376/PN/2014 decided on 08-01-2016 deleted the addition on account of interest on NPAs. Now, the Revenue is in appeal before the Tribunal. The assessee has filed cross objections supporting the order of Commissioner of Income Tax (Appeals). 3. Shri Mukesh Jha representing the Department vehemently supported the findings of Assessing Officer in disallowing interest on NPAs. The ld. DR submitted that the provisions of Income Tax Act override RBI guidelines. In support of his submissions, the ld. DR placed reliance on the decision of Hon ble Supreme Court of India in the case of Southern Technologies Ltd. Vs. Joint Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind an identical issue had come up before the Hon ble Bombay High Court in the case of Deogiri Nagari Sahakari Bank Ltd. and other connected appeals reported in 379 ITR 24. The Hon ble High Court has decided the issue and dismissed the appeal filed by the Revenue by observing as under : 3. The common issue involved in all these appeals relating to the assessment year as mentioned in the aforesaid table about the deletion of the additions on account of interest on sticky advances. In all these cases, the Assessing Officer, during the assessment proceeding has observed that the provisions of section 43D of the Income-tax Act cannot be applied to the assessee as it is not a scheduled bank but a co-operative bank. In the opinion of the Assessing Officer, considering the provisions of section 43D of the Income-tax Act, non-scheduled co-operative banks are specifically excluded from the special provisions of section 43D of the Income-tax Act, regarding interest on sticky advances. The Assessing Officer has also held that the Central Board of Direct Taxes Circular No. F. 201/ 81/84 ITA-II, dated October 9, 1984, is applicable only to banking companies and not to non -scheduled bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(3) of the Income-tax Act, 1961, are required to be confirmed. Learned counsel for the appellants submits that the Tribunal ought to have allowed the appeal by relying on the judgment in the matter of Southern Technologies Ltd. v. Joint CIT reported in [2010] 320 ITR 577 (SC) ; [2010] 2 SCC 548. 7. The learned counsel for the respondent-co-operative banks submit that the issues involved in the above appeals are no more res integra in view of the decision rendered by the hon'ble Supreme Court in the case of UCO Bank v. CIT reported in [1999] 237 ITR 889 (SC) ; [1999] 4 SCC 599. 8. Learned counsel for respondent submits that the learned Tribunal has rightly dismissed the appeals of the Revenue by confirming the order passed by the Commissioner of Income-tax (Appeals). There is no substantial question of law involved in these appeals and, thus, all the appeals are liable to be dismissed. 9. The Income-tax Appellate Tribunal has referred the case of Vasisth Chay Vyapar Ltd. [2011] 330 ITR 440 (Delhi). In this case, the Revenue relied upon the decision of the hon'ble Supreme Court in the case of Southern Technologies Ltd. (supra). The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod of accounting, transferring the doubtful debt to an interest suspense account and not treating it as profit until actually received, is in accordance with accounting practice ... up to the assessment year 1978- 79 the taxability of interest on doubtful debts credited to suspense account will be decided in the light of the Board's earlier Circular dated October 6, 1952, as the said circular was withdrawn only in June, 1978. The new procedure under the Circular of October 9, 1984, will be applicable for and from the assessment year, 1979-80. All pending disputes on the issue should be settled in the light of these instructions. Therefore, up to the assessment year 1978-79, the Central Board of Direct Taxes's Circular of October 6, 1952 would be applicable; while from the assessment year 1979- 80, the Central Board of Direct Taxes's Circular of October 9, 1984 is made applicable. In the present case, the assessment was made on' the basis of the Central Board of Direct Taxes's Circular on October 9 1984, since the assessment pertains to the assessment year 1981-82 to which the Circular of October 9, 1984, is applicable ... If, the Board has considered it necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se account is, in fact, arising in respect of a doubtful or 'sticky' loan. This is done by providing that non-receipt of interest for the first three years will not be treated as interest on a doubtful loan. But if after three years the payment of interest is not received, from the fourth year onwards it will be treated as interest on a doubtful loan and will be added to the income only when it is actually received ... There is no inconsistency or contradiction between the circular so issued and section 145 of the Incometax Act. In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to section 145 of the Income-tax Act or illegal in any form. It is meant for a uniform administration of law by all the Income-tax authorities in a specific situation and, therefore, validly issued under section 119 of the Income-tax Act. As such, the circular would be binding on the department . . . The relevant circulars of Central Board of Direct Taxes cannot be ignored. The question is not whether a circular can override or detract from the provisions of the ..... 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