The Bijapur Dist Central Co-Op Bank Ltd., V. JCIT,

ITA 1772/BANG/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7026 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJAY KUMAR PANDA
• Assessee Lawyers: S RAMASUBRMANIAN
• Keywords: Additional evidence; Bad and doubtful debts
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO S . 1711 & 1712 / BANG/20 13 (ASSESSMENT YEAR S : 20 0 9 - 10 & 2010 - 11 ) ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1, BIJAPUR. APPELLANT VS. THE BIJAPUR DISTRICT CENTRAL CO - OP. BANK LTD. BIJAPUR. RESPONDENT PAN: AAAAB0694E AND ITA NOS.17 72 & 17 73 /BANG/2013 (ASSESSMENT YEARS: 2009 - 10 & 2010 - 11) THE BIJAPUR DISTRICT CENTRAL CO - OP. BA NK LTD. BIJAPUR. APPELLANT VS. JOINT COMMISSIONER OF INCOME - TAX/ DEPUTY COMMISSIONER OF INCOME - TAX CIRCLE - 1, BIJAPUR. RESPONDENT REVENUE BY: SHRI BIJAY KUMAR PANDA, ADDL.CIT (DR). ASSESSEE BY: SHRI S.RAMASUBRMANIAN, CA. DA TE OF HEARING : 10 /12/2014 . DATE OF PRONOUNCEMENT: 31 /12/2014 . O R D E R PER SMT.P.MADHAVI DEVI, JM: ALL THESE ARE CROSS APPEALS FILED BY BOTH THE ASSESSEE AND THE REVENUE AGAINST THE ORDERS OF THE CIT(A), BELGAUM, DATED 01/10/2013 FOR THE A SSESSMENT YEARS 2009 - 10 AND 2010 - 11. ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 2 OF 11 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING. IT HAS OBTAINED LICENSE FROM THE RESERVE BANK OF INDIA AS A CO - OPERATIVE BANK. FOR THE RELE VANT ASSESSMENT YEAR IT HAS FILED ITS RETURN OF INCOME. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'] , T HE ASSESSING OFFICER (AO) OBSERVED FROM THE PROFIT AND LOSS ACCOUNT , THAT THE ASSESSEE - CO - OPERATIVE SOCIETY HAS DEBITED RS.21,55,40,752/ - TOWARDS INTEREST PAID O DEPOSITS AND P.A. COMMISSION. AFTER CONSIDERING THE BREAK - UP OF THE INTEREST PAID TO INDIVIDUALS, CO - OPERATIVE SOCIET IES AND URBAN BANK S , HE OBSERVED THAT THE INTEREST PAID IN EXC E SS OF RS.10,000/ - ON TIME DEPOSITS TO INDIVIDUAL S IS RS.1,68,13,729/ - . THE ASSESSEE SUBMITTED THAT THE AFORESAID INTEREST ON TIME DEPOSITS WAS ENTIRELY PAID TO MEMBERS OF THE ASSESSEE CO - OPERATIVE BANK . THE AO OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE WHILE MAKING SUCH PAYMENT TOWARDS INTEREST EXCEEDING RS.10,000/ - ON TIME DEPOSITS. HE OBSERVED THAT AS PER THE PROVISIONS OF SUB - CLAUSE (B) OF CLAUSE (I) OF SEC.194A(3) OF THE ACT, ANY CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN THE BUSINESS OF BANKING SHALL HAVE TO DEDUCT TAX ON INTEREST PAID OR PAYABLE TO ANY PERSON ON TIME DEPOSITS IF THE AMOUNT OF SUCH INTEREST EXCEEDS RS.10,000/ - . SINCE THE ASSESSEE HAS FAILED TO DO SO, HE INVOKED THE PROVISIONS OF SEC.40(A)(IA) AND SOUGHT TO DISALLOW THE SAME. THE ASSESSEE FILED ITS WRITTEN SUBMISSIONS STATING THAT ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 3 OF 11 THE ASSESSEE IS A PRIMARY CO - OPERATIVE SOCIETY AND THE REAFTER ONLY , A CO - OPERATIVE BANK AND FURTHER THAT THE PAYMENT OF INTEREST TO ITS MEMBERS ARE EXEMPT FROM TDS PROVISIONS AS PER SE.194(3)( V) OF THE ACT DUE TO WHICH THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE. THE AO, HOWEVER, WAS NOT CONVINCED WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT THE PROVISIONS OF SECTION 194A3(I)(B) ARE APPLICABLE AND THE ASSESSEE WAS LIABLE TO MAKE TDS. FO R FAILURE TO DO SO, IT WAS BROUGHT TO TAX. 2.1 THE AO FURTHER OBSERVED THAT THE ASSESSEE - BANK IS FOLLOWING HYBRID SYSTEM OR MIXED SYSTEM OF ACCOUNTING TO COMPUTE ITS NET INCOME FROM ITS BANKING BUSINESS. THE ASSESSEE WAS ASKED TO CLARIFY THE IS SUE. THE ASSESSEE, VIDE LETTER DATED 04/11/2011 STATED THAT AS REGARDS THE ACCOUNT ING OF INTEREST ON LOANS/ADVANCES IS CONCERNED, THE ASSESSEE IS FOLLOWING MIXED SYSTEM OF ACCOUNTING REGULARLY AND SYSTEMATICALLY SINCE MANY LONG YEARS AND THAT THERE IS NO CHANGE IN THE METHOD OF ACCOUNTING DURING THE YEAR. IT WAS SUBMITTED THAT THE BANK IS REQUIRED TO ACCOUNT INTEREST ON LOANS AND ADVANCES ON RECEIPT BASIS UNDER THE KARNATAKA CO - OPERATIVE SOCIETIES ACT TO ENSURE EFFECTIVE CREDIT CONTROL AND RECOVER PROCEDU RES OF THE BANK. THE AO WAS, HOWEVER, NOT CONVINCED WITH THE ASSESSEE S CONTENTION AND HELD THAT IN ORDER TO ARRIVE AT THE CORRECT TAXABLE INCOME AS PER THE INCOME - TAX ACT, THE INTEREST RECEIVABLE ON LOANS AND ADVANCES /INVESTMENTS BUT NOT CREDITED TO PROFI T AND LOSS ACCOUNT ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 4 OF 11 HAS TO BE ADDED. THEREAFTER, ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE, HE OBSERVED THAT INTEREST RECEIVABLE ON OVERDUE/NPA LOANS IS NOT CREDITED TO PROFIT AND LOSS ACCOUNT BUT THE SAME IS SHOWN ON BOTH SIDES OF THE BALANCE SHEET . THEREAFTER , HE WORKED OUT INTEREST RECEIVABLE ON LOAN S BUT NOT CREDITED TO PROFIT AND LOSS ACCOUNT AND SOUGHT TO BRING IT TO TAX. THE ASSESSEE REPLIED THAT THE BANK IS FOLLOWING MERCANTILE SYSTEM OF BANKING BUT INTEREST ON LOAN S AND ADVANCES IS ACCOUNT ED ON RECEIPT BASIS. THE AO, HOWEVER, RELIED UPON THE CBDT CIRCULAR NO.201/21/84 - ITA - II DATED 09/10/1984 WHEREIN IT HAS BEEN CLARIFIED THAT INTEREST IN RESPECT OF DOUBTFUL DEBTS/NPA DEBTS CREDITED TO SUSPENSE ACCOUNT OR ANY OTHER ACCOUNT IS INCLUDIBLE IN THE TAXABLE INCOME OF THE ASSESSEE. HE ALSO CONSIDERED THE PROVISIONS OF SEC.43D OF THE ACT AND HELD THAT THE PROVISIONS OF SEC.43D ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS IT WAS NOT A SCHEDULED BANK. THEREFORE, HE HELD THAT INTEREST RECEIVABLE ON LOANS AND INVESTMENTS ON ACCRUAL BASIS BUT NOT CREDIT ED TO PROFIT AND LOSS ACCOUNT IS TO BE ADDED TO THE RETURNED INCOME. HE ACCORDINGLY BROUGHT IT TO TAX. 2.2 THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS PAID GRATUITY OF RS.80,136/ - AND HE HELD THAT IT CAN BE ALLOWED ONLY IF THE FUND IS APPROVED BY THE PRESCRIBED AUTHORITY , O BSERVING THAT THE ASSESSEE HAS FAILED TO FURNISH COPY OF THE ORDER UNDER RULE ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 5 OF 11 2(1) OF PART C OF IV SCHEDULE TO THE ACT AND THEREFORE THE ABOVE SUM IS NOT ADMISSIBLE , HE ACCORDINGLY BROUGHT IT TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A) FOR BOTH THE ASSESSMENT YEARS, WHO PARTLY ALLOWED THE SAME AND AGAINST THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US WHILE THE ASS ESSEE IS IN APPEAL AGAINST CONFIRMATION OF THE ADDITION BY THE CIT(A). 4 . AS FAR AS THE ASSESSEE S APPEAL IS CONCERNED, THE GROUND NOS.1 TO 5 ARE AGAINST THE CONFIRMATION OF THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOU RCE IN RESPECT OF INTEREST PAID TO THE MEMBERS IN EXCESS OF RS.10,000/ - . 4 . 1 AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE BAGALKOT DISTRICT CENTRAL CO - OP. BANK VS. JCIT IN ITA NO.1572/BANG/2013 DATED 30/05/2014 WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE WHICH IS A CO - OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS, WHEN IT PAYS INTEREST INCOME TO A MEMBER BOTH ON TIME DEPO SITS AND ON DEPOSITS OTHER THAN TIME DEPOSITS, WITH SUCH CO - OPERATIVE SOCIETY, NEED NOT DEDUCT TAX AT SOURCE U/S 194A BY VIRTUE OF EXEMPTION GRANTED VIDE CLAUSE (V) OF SUB - SECTION(3) OF THE SAID SECTION. A COPY OF THE SAID ORDER IS PLACED BEFORE US. ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 6 OF 11 4 .2 HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. HOWEVER, WE REMIT THE ISSUE TO THE FILE OF THE AO FOR VERIFICATION AND QUANTIFICATION OF THE INTEREST PAID TO MEMBERS ON B OTH TIME DEPOSITS AND OTHER DEPOSITS. NEEDLESS TO MENTION THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 5 . AS REGARDS GROUND NOS.6 & 7 RELATING TO CONFIRMATION OF DISALLOWANCE OF GRATUITY PAID TO RETIRED EMPLOYEES, THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT THE AMOUNT PAID IS TOWARDS UNAPPROVED GRATUITY FUND. HE SUBMITTED THAT THE ASSESSEE HAD, IN FACT, MADE PAYMEN T TO THE RETIRED EMPLOYEES AND IS NOT A CONTRIBUTION TOWARDS A PROVISION OR A FUND AND THEREFORE THE PROVISIONS OF SEC.36(1)(V) AND 40(A)(IA) OF THE ACT DO NOT APPLY. THE ASSESSEE HAS ALSO FILED THE EVIDENCE IN SUPPORT OF HIS CONTENTION THAT GRATUITY HAS BEEN PAID TO THE EMPLOYEES. THE ASSESSEE HAS FILED AN APPLICAT ION FOR ADMISSION OF ADDITIONAL EVIDENCE. 5.1 THOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, SUBMITTED THAT THE ISSUE NEEDS VERIFICATION BY THE AO AND THEREFORE THE AO MAY BE DIRECTED TO CONSIDER THE I SSUE DE NOVO. ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 7 OF 11 5 .2 HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT GRATUITY ACTUALLY PAID BY THE ASSESSEE CANNOT BE DISALLOWED U/S 36(1)(V) OR U/S 40(A)(IA) OF THE ACT. HOWEVER, THE ASSESSEE S CONTENTION THAT GRAT UITY HAS BEEN PAID TO THE RETIRED EMPLOYE ES HAS NOT BEEN VERIFIED BY ANY OF THE AUTHORITIES BELOW. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMIT THIS ISSUE TO THE FILE OF THE AO FOR LIMITED PURPOSE OF VERIFICATION AS TO WHETHER GRATUITY HAS ACT UALLY BEEN PAID TO THE EMPLOYEE S . HOWEVER, IF IT IS FOUND THAT GRATUITY HAS BEEN CREDITED TO A PROVISION OR A FUND, THEN THE AO IS FREE TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 6 . IN THE ASSESSEE S APPEAL FOR ASSESSMENT YEAR 2010 - 11 , WE FIND THAT THE ONLY ISSUE IS WITH REGARD TO NON - DEDUCTION OF TAX AT SOURCE U/S 194A ON INTEREST PAID TO ITS MEMBERS AND THE CONSEQUENCE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THIS ISSUE HAS ARISEN IN THE ASSESSMENT YEAR 2009 - 10 AND OUR DECISION FOR THE SAID YEA R IS ALSO APPLICABLE TO THE ASSESSMENT YEAR 2010 - 11. THE AO IS ACCORDINGLY DIRECTED TO VERIFY AND QUANTIFY THE INTEREST PAID TO MEMBERS ON BOTH TIME DEPOSITS AND OTHER DEPOSITS. THIS GROUND IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE ASSESSEE S APPEALS FOR BOTH THE ASSESSMENT YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 8 OF 11 8 . AS REGARDS THE REVENUE S APPEAL S ARE CONCERNED, THE ONLY GROUND RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE BY THE AO ON ACCO UNT OF INTEREST ACCRUED ON NPA BUT NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE CIT(A) HAD FOLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CANFIN HOMES LTD. (2011) 5 TAXCORP(DT) 49593 TO HOLD THAT INTEREST IS TAXABLE ONLY ON RECEIPT. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CANFIN HOMES LTD. (SUPRA) CANNOT BE APPLIED TO THE FACTS OF THE CASE BEFORE US, AS THE HON BLE HIGH COURT HAS NOT CONSIDERE D THE PROVISIONS OF SEC.43D WHEREAS IN THE PRESENT CASE , THE AO AS WELL AS THE CIT(A) HAVE DISCUSSED THE PROVISIONS OF SEC.43D OF THE ACT. ACCORDING TO HIM, SEC.43D HAS BEEN INTRODUCED BY THE LEGISLATURE IN ORDER TO GRANT BENEFIT TO SCHEDULED BANK S AND SI NCE THE ASSESSEE IS NOT IN THE LIST OF SCHEDULED BANK S , PROVISIONS OF SEC.43D ARE NOT APPLICABLE AND THE BENEFIT AVAILABLE U/S 43D CANNOT BE EXTENDED TO THE ASSESSEE HEREIN. 8 .1 THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED T HAT AS PER BANKING REGULATION S AND GUIDELINES, INTEREST ON NPA HAS TO BE RECOGNIZED ONLY ON RECEIPT BASIS AND THE HON BLE SUPREME COURT IN THE CASE OF UCO B ANK HAS CLEARLY HELD THAT INTEREST ACCRUED ON STICKY ADVANCES WHICH WAS NOT BROUGHT INTO PROFIT AND LOSS ACCOUNT BUT TAKEN INTO SEPARATE ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 9 OF 11 SUSPENSE ACCOUNT SHOULD BE ADDED AS INCOME ONLY WHEN ACTUALLY RECEIVED. HE SUBMITTED THAT THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CANFIN HOMES LTD., (SUPRA) HAS CONSIDERED AND FOLLOWED THE DECISION OF THE HON B LE SUPREME COURT IN GRANTING RELIEF TO THE ASSESSEE THEREIN. THUS, ACCORDING TO HIM, THE DECISION OF THE JURISDICTIONAL HIGH COURT IS BINDING ON THE REVENUE AUTHORITIES AND THE CIT(A) HAS RIGHTLY FOLLOWED THE SAME. HE ALSO PLACED RELIANCE UPON THE DECISI ON OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF SALES - TAX VS. JALANI TOOLS (INDIA) LTD. (2014) 76 VST 104(BOM) WHEREIN AFTER REFERRING TO THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CENTRAL BOARD OF DAWOODI BOHRA COMMUNITY V S. STATE OF MAHARASHTRA (2005) AIR 2005 SC 752 , ON PRINCIPLE S OF BINDING PRECEDENTS HAS OBSERVED THAT THE DECISION OF THE CO - ORDINATE BENCH IS BINDING ON ANOTHER COURT UNTIL IT IS ESTABLISHED THAT IT WAS PER INCURIUM. IT WAS FURTHER HELD THAT A BINDING PRECEDENT CANNOT BE IGN ORED OR BRUSHED ASIDE ON THE SP A CIAL PLEA THAT BETTER ARGUMENT COULD HAVE BEEN CANVASSED OR SOME THING ESCAPED THE ATTENTION OF THE BENCH WHILE DECIDING THE EARLIER CASE. THUS, ACCORDING TO HIM, THE FINDINGS OF THE CIT(A) THAT INTE REST ON NPA IS TAXABLE ONLY ON RECEIPT, IS ON THE BASIS OF THE DECISION OF THE JURISDICTIONAL HIGH COURT. 8 .2 HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT SEC.43D IS A SPECIAL PROVISION ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 10 OF 11 RELATING TO THE INCOME O F PUBLIC FINANCIAL INSTITUTIONS, PUBLIC COMPANIES ETC. THE SAID SECTION WAS SUBSTITUTED BY THE FINANCE ACT, 1999 W.E.F. 01/04/2000 PROVIDING THAT IN CASE OF PUBLIC FINANCIAL INSTITUTIONS MENTIONED IN THE SAID SECTION , INTEREST IN RELATION TO SUCH CATEGORI ES OF BAD OR DOUBTFUL DEBTS AS MAY BE PRESCRIBED HAVING REGARD TO THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA , SHALL BE CHARGED TO TAX IN THE PREVIOUS YEAR IN WHICH IT IS CREDITED BY SUCH INSTITUTIONS TO ITS PROFIT AND LOSS ACCOUNT FOR THAT YEAR OR IN THE YEAR IN WHICH IT IS ACTUALLY RECEIVED BY THE INSTITUTION OR BANK OR CORPORATION OR COMPANY WHICHEVER IS EARLIER. ADMITTEDLY, THE ASSESSEE IS NOT FALLING IN ANY OF THE CATEGORIES OF PUBLIC FINANCIAL INSTITUTIONS STATED IN THE SAID SECTION. THEREFOR E, THIS PROVISION IS NOT APPLICABLE TO THE ASSESSEE. DE HORSE SAID SECTION , WHETHER THE ASSESSEE IS ENTITLED TO FOLLOW THE MIXED SYSTEM OF ACCOUNTING AS FAR AS INTEREST ON NPA IS CONCERNED, WE FIND THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF CANFIN HOMES LTD. (SUPRA) HAS CONSIDERED THE ISSUE AT LENGTH AND HAS HELD THAT IT IS TAXABLE ON RECEIPT BASIS. SINCE THE ISSUE OF THE APPLICABILITY OF SEC.43D HAD NOT ARISEN IN THE CASE OF CANFIN HOMES LTD. (SUPRA) BEFORE THE HON BLE KARNATAKA HIGH COURT, THE HO N BLE HIGH COURT HAS NOT CONSIDERED THE SAME . THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT SINCE SECTION 43D BENEFIT IS AVAILABLE ONLY TO THE PRESCRIBED PUBLIC FINANCIAL INSTITUTIONS, IT IS TO BE CONSTRUED THAT OTHER INSTITUTIONS ARE NO T ELIGIBLE FOR SUCH ITA NO S . 1711,1712, 1773 & 1774 /BANG/20 1 3 THE BIJA PUR DISTRICT CENTRAL CO - OP.BANK LTD. PAGE 11 OF 11 BENEFIT. THIS ARGUMENT WOULD BE ACCEPTABLE, IF THE ASSESSEE HAD CLAIMED THE BENEFIT OF SEC.43D, WHICH IS NOT THE CASE IN THE CASE BEFORE US. IN THE CASE OF CANFIN H OMES LTD. ( CITED SUPRA) THE HON BLE HIGH COURT HAS LAID DOWN THE LAW O N ACCRUAL OF INCOME, PARTICULARLY INTEREST ON STICKY LOANS/NPA AND HAS HELD THAT IF IN THE ACCOUNT OF THE ASSESSEE, IT IS CLEARLY STATED THAT THOUGH A PARTICULAR INCOME IS DUE TO HIM BUT IT IS NOT POSSIBLE TO RECOVER THE SAME, THEN IT CANNOT BE SAID TO HAV E BEEN ACCRUED AND THE SAID AMOUNT CANNOT BE BROUGHT TO TAX. THIS JUDGMENT IS CLEARLY ON SIMILAR SET OF FACTS AS IN THE CASE OF THE ASSESSEE BEFORE US. IN VIEW OF THE SAME, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS IN CONSONANCE WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT ON THE ISSUE. 8 .3 I N THE RESULT, THE REVENUE S APPEAL ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31 ST OF DECEMBER, 2014. SD/ - SD/ - (JASON P BOAZ) (SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDE R ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE.