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TMI Blog2019 (11) TMI 1603X X X X Extracts X X X X X X X X Extracts X X X X ..... U) preferred appeal before the ld CIT(A), who passed an order on 24.03.2015, wherein, appeal of the assessee is partly allowed. Therefore, both the parties are in appeal before us. 3. We first take up the appeal of the revenue. 4. The revenue has raised the following grounds of appeal:- "1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 12,33,47,000/- on account of disallowance of provision for post retirement medical expenses. 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 6,61,96,753/- made by the AO on account of interest accrued to various cooperative societies but taxable in the hands of the assessee i.e. M/s REC Ltd. 3. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 85,00,000/- made by the AO without appreciating that notwithstanding offering of such income by various societies in their hands, the same is legally taxable in the hands of the assessee i.e. M/s REC Ltd. only. 4. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad to be considered as interest income of the assessee. Thus, the ld AO made an addition. The ld CIT(A) held that if the income is charged to tax in the hands of those cooperative societies then the ld AO may verify the actual interest which has been shown as income by that cooperative society then same cannot be charged to the tax in the hands of the assessee. Against this finding of the ld CIT(A), the revenue is in appeal before us. 8. We have heard the rival parties and find that identical issue has been considered in the case of the assessee for Assessment Year 2009-10 in para No. 41 of that order. As the ld CIT(A) has clearly give a direction to the ld AO to verify the interest income offered by the cooperative society and taxed in the hands of that society same cannot be taxed in the hands of the assessee. We find that there is no grievance caused to the revenue. In the present case the ld AO has already made enquiry with the cooperative societies and it was found that those cooperative societies have offered the above amount to tax in their own hands. Further, it was merely a direction to the ld AO for verification. We do not find any infirmity in the order of the ld CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect to presume that interest on such advances have certainty of recovery. In view of this, we do not find that in the present case where the business of the assessee is to finance cooperative societies for rural electrification and such advances have become irrecoverable, 'NPA' interest thereon can be recovered and offered to tax on its accrual. Undoubtedly, as and when such interest are received would be chargeable to tax on the date on which the interest is actually earned by the assessee. Accordingly, we find no merit in ground No. 4 of the appeal of the AO. Hence we dismiss Ground No. 4 of the appeal of the ld AO. 13. Now we come to the appeal of the assessee wherein, the assessee has raised the following grounds of appeal:- "1. On the facts and in the circumstances of the case and in Law, the Ld. CIT (Appeals) has erred in relying solely on the order pronounced by the Hon'ble ITAT Hyderabad, in the case of "Cooperative Electrical Society- Sircilla, Hyderabad Vs Asst. Commissioner of Income Tax, Karimnager, Hyderabad", by not appreciating the factual and legal proposition that the said order has been pronounced against the "Principle of Natural Justice" as the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The brief facts of the case shows that the ld AO has made the above addition on account of treating the income earned by the Cooperative Electrical Supply Society Ltd, Sircilla on special fund created out of interest forgone by the appellant company as income of the assessee. The ld AO made the addition vide para No. 6.10 of his order holding that AO, Circle-1, Karim Nagar has passed an information to the ld AO on 23.12.2010 that income of Rs. 49 lakhs on account of interest from the appellant is not offered to tax by the above society. It was also stated that the interest income of Rs. 85 lakhs is also not offered to tax by that society. But no information was there related to Assessment Year 2008-09. The ld AO to protect the interest of the revenue and in absence of cooperation from the assessee made an addition of Rs. 85 lakhs as income of interest on special fund with the Cooperative Electric Supply Company Ltd, Sircilla. The assessee challenged the above addition before the ld CIT(A). The ld CIT(A) vide para No. 3.8(d) has confirmed the above addition based on the order of the coordinate bench in case of one of the cooperative societies. Therefore, the assessee is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessee's own case for Assessment Year 2006-07 has followed the Hyderabad Bench decision in case of cooperative societies to confirm the addition in the hands of the appellant. On careful perusal of the above two decisions, it is apparent that there are contrary decisions of the Chennai Bench and Hyderabad Bench on the same set of facts. Therefore, in such a situation an approach which is favourable to the assessee is required to be adopted as laid down by the Hon'ble Supreme Court in CIT Vs. Vegetables 88 ITR 192. In view of this, we direct the ld AO to delete the addition of Rs. 85 lakhs in the hands of the assessee pertaining to the special reserve fund held by cooperative electric supply company ltd Sricila. Accordingly, ground Nos. 1 to 3 of the appeal are allowed. 17. Ground No. 4 of the appeal is with respect to taxability of interest accrued on advances to various cooperative societies. The above issue has already been discussed while deciding the ground No. 2 of the appeal of the ld AO wherein, the ld CIT(A) has set aside the whole issue to the file of the ld Assessing Officer. We have already held that there is no grievance caused to the revenue as well as to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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