| The Tax Publishers2020 TaxPub(DT) 3952 (Bang-Trib) INCOME TAX ACT, 1961
Section 4
Once a particular asset is shown to be non-performing asset, then assumption is that it is not yielding any income and when it is not yielding any income, the question of showing that as revenue and paying tax thereon would not arise.
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Income - Accrual of income - Interest on non-performing assets -
Assessee was a co-operative bank carrying on banking business. AO noticed assessee was following hybrid system of accounting, viz., cash system for accounting interest income on loans given by it and mercantile system for all other items. In view of same, assessee did not account for interest accrued on standard asset and non-performing assets. Relying on section 145, AO made addition on allegation that interest income accrued on standard assets and non-performing assets should be assessed on accrual basis. Held: Issue relating to addition of interest income accrued on non-performing assets was considered by coordinate bench in assessee's own case in assessment years 2009-10 and 2010-11. It was decided in favour of assessee by holding that mere nomenclature adopted with reference to bad loans and advances receivable, would refer to all non-performing assets of any nature, of whatever category it was placed as a non-performing asset. Therefore, decision of Court in Canfin Homes Ltd.'s case would squarely apply.
Followed: The CIT, Belgaum and Jt. CIT, Bijapur v. Siddeshwar (2016) 388 ITR 588 (Karn) : 2016 TaxPub(DT) 3426 (Karn-HC), CIT, Central Circle, Bangalore v. Canfin Homes Ltd. (2012) 347 ITR 382 (Karn) : (2011) 201 Taxman 273 (Karn) : (2011) 13 taxmann.com 43 (Karn) : 2011 TaxPub(DT) 2033 (Karn-HC) and Dy. CIT, Circle-2 (1), Davangere v. M/s. Chitradurga District Co-op. Central Bank Ltd. and Vice-Versa. [I.T. A. Nos. 1522 & 1523/Bang/2016, 1548 & 1549/Bang/2016, dt. 28-9-2017]
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2012-13
IN THE ITAT, BANGALORE BENCH
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