THECHIKHALI URBAN CO.OP. BANK LTD, V. A.C.I.T, .AKOLA Cir, Akola

ITA 251/NAG/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9659 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 08-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHAILESH AGRAWAL; K B LOTIYA
• Keywords: Question of law; Bad and doubtful debts; Notional interest
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SH. G.D.AGRAWAL, HONBLE PRESIDENT AND SH. MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.251/NAG/2015 (ASSESSMENT YEAR: 2012 -13) THECHIKHALI URBAN CO.OP.BANK LTD., DR. SHAMAPRASAD MUKHARJI ROAD, CHIKHALI, DISTT. BULDHANA-443201. PAN-AAAAT4084G VS ACIT, AKOLA CIRCLE, AAYKAR BHAWAN, ALSI PLOT SQUARE, AKOLA. (APPELLANT) (RESPONDENT) APPELLANT BY SH.K.B.LOTIYA, ADV. & SH.SHAILESH AGRAWAL, CA RESPONDENT BY SH. GITESH KUMAR, SR DR DATE OF HEARING 06.03.2018 DATE OF PRONOUNCEMENT 06.03.2018 O R D E R PER BENCH THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER NO.CIT(A)-I, 358/2014-15 OF LD.CIT(A)-I, NAGPUR CON FIRMING THE DISALLOWANCE OF INTEREST OF UNREALIZED NON-PERFORMI NG ASSET (IN SHORT NPA) FOR A.Y. 2012-13. FOR THIS, THE ASSESSEE H AS RAISED FOLLOWING THREE EFFECTIVE GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF ` .1,77,10,835/- BEING UNREALIZED NPA INTEREST. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE PROVISIONS OF SECTION 43D AS HELD B Y THE HONOURABLE INCOME TAX APPELLATE TRIBUNAL IN THE CAS E OF KARNAVATI COOP. BANK LTD. VS DEPUTY COMMISSIONER OF INCOME TA X REPORTED IN 144 TTJ (AHD) 769. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE NUMBER OF INCOME TAX APPELLATE TRIB UNAL JUDGEMENTS AND HIGH COURT JUDGEMENTS ON THE POINT I N ISSUE. ITA NO. 251/NAG/2015 2 2. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF ` .1,77,10,835/- TOWARDS NET ACCRUED UNREALIZED NPA I NTEREST ON ACTUAL REALIZATION BASIS AND THIS METHOD HAS BEEN CONSISTE NTLY FOLLOWED. BUT ACCORDING TO AO, ONCE THE ASSESSEE HAS QUANTIFIED T HE AMOUNT OF INTEREST RECEIVABLE ON THE NPA ACCOUNT, SAME HAS NOT BEEN OF FERED FOR TAXATION. ACCORDING TO AO, THE ASSESSEE IS FOLLOWING MERCANTI LE SYSTEM OF ACCOUNTING AND HENCE TOTAL TAXABLE INCOME SHOULD INCLUDE WHOLE INCOME WHETHER ACCRUED AND/OR RECEIVED. ACCORDINGLY, THE AO ADDED THE ACCRUED UNREALIZED INTEREST OF NPA AMOUNTING TO ` .1,77,10,835/- TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PR EFERRED APPEAL BEFORE LD.CIT(A). 3. LD. CIT(A) ALSO CONFIRMED THE ACTION OF THE AO B Y OBSERVING IN PARA 10, 10.1 AS UNDER:- 10.0. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. AS POINTED OUT BY THE APPELLANT IT IS OBSERVED THAT ON IDENTICAL F ACTS, MY LEARNED PREDECESSORS HAVE DECIDED THE ISSUES VIDE ORDER NO. C1T (A) - 1/013/09-10 FOR AY 2007-08 AND VIDE ORDER DATED 05- 07-2010 FOR A.Y. 2007-08 AND VIDE ORDER NO.C1T(A)-1/339/2011-12 DATED 15.11.2012 IN AKOLA DISTRICT CO-OPERATIVE BANK FOR A. Y. 2009-10 HOLDING THAT THE ADDITION ON INTEREST ON NPA IS REQ UIRED TO BE MADE IN ACCORDANCE WITH BOARD'S CIRCULAR DATED 09.10.1984. I HAVE ALSO FOLLOWED THE SAID BOARD'S CIRCULAR AND HAVE DECIDED THE IDENTICAL ISSUE IN APPEAL NO. CIT (A) -1/174/2013-14 DATED 05 .11.2014 IN WASHIM URBAN DISTRICT CO-OP. BANK LTD. ITA NO. 251/NAG/2015 3 10.1. CONSIDERING THE FACTS OF THE PRESENT CASE, IT WOULD BE NECESSARY TO COMPUTE THE INCOME THAT IS TO BE BROUGHT TO TAX BEING INTEREST ON CERTAIN AMOUNT CLASSIFIED AS NPAS IN VIEW OF THE BO ARD'S ABOVE REFERRED CIRCULAR DATED 09.10.1984. THE AR OF THE A PPELLANT WAS REQUESTED TO PROVIDE THE BIFURCATION OF THE INTERES T ACCRUED ON NPAS AND THE FIGURES OF INTEREST ATTRIBUTABLE TO SUCH NP AS WHICH ARE OUTSTANDING FOR LESS THAN 3 YEARS AND MORE THAN 3 Y EARS AS ON 31.03.2010. THE AR OF THE APPELLANT HAS PROVIDED T HE FIGURES IN HIS SUBMISSION REPRODUCED ABOVE. THE AR IN HIS SUBMISSI ONS HAS GIVEN NEGATIVE FIGURE OF RS.(-)44,62,732/- BEING THE NPA INTEREST UPTO THE RELEVANT FINANCIAL YEAR. THE AR WAS SPECIFICALLY AS KED TO EXPLAIN THE NEGATIVE FIGURE NPA INTEREST CLAIMED TO HAVE ACCRUE D BUT NOT RECEIVED OF RS.44,62,732/- DURING THE PERIOD OF 36 MONTHS. T HE AR COULD NOT FILE ANY EXPLANATION ON THE SAME. THEREFORE, THE FI GURES OF NPA INTEREST AS REFLECTED IN THE BALANCE-SHEET OF THE APPELLANT WHICH IS DISALLOWED BY THE AO IS TAKEN TO BE THE CORRECT FIGURE OF NPA INTEREST FOR WANT OF ANY CLARIFICATION AND BIFURCATION ON THE SAME BY TH E AR OF THE APPELLANT. IN VIEW THEREOF, I CONCUR WITH THE ORDER OF THE AO AND UPHOLD THE DECISION OF THE AO FOR ADDITION OF NPA O F RS.I,77,10,835/-. HENCE, THIS GROUND IS DISMISSED. AGGRIEVED, NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE OF THE ASSESSEE APPEAL ON THE ABOVE FACTS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BL E BOMBAY HIGH COURT, AURANGABAD BENCH IN THE CASE OF CIT, AURANGABAD VS M/S. DEOGIRI NAGARI SAHAKARI BANK LTD., AURANGABAD IN ITA NO.53 OF 2014 VIDE ORDER DATED 22.01.2015 WHEREIN HON'BLE BOMBAY HIGH COURT HAS DE CIDED THE ISSUE VIDE PARA 9 TO 13 AS UNDER:- ITA NO. 251/NAG/2015 4 9. THE INCOME TAX APPELLATE TRIBUNAL HAS REFERRED THE CASE OF M/S. VASISTH CHAY VYAPAR LIMITED 330 ITR 440 (DELHI ). IN THIS CASE, THE REVENUE RELIED UPON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. SUP RA. THE LEARNED INCOME TAX APPELLATE TRIBUNAL HAS REPRODUCED THE OB SERVATIONS MADE BY THE DELHI HIGH COURT WHILE REFERRING THE SA ID CASE OF M/S SOUTHERN TECHNOLOGIES LIMITED SUPRA. THE ASSESSEE H EREIN BEING A COOPERATIVE BANK ALSO GOVERNED BY THE RESERVE BANK OF INDIA AND THUS THE DIRECTIONS WITH REGARD TO THE PRUDENTIAL N ORMS ISSUED BY THE RESERVE BANK OF INDIA ARE EQUALLY APPLICABLE TO THE COOPERATIVE BANKS. THE HON'BLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LIMITED SUPRA HELD THAT, PROV ISIONS OF SECTION 45Q OF RESERVE BANK OF INDIA ACT HAS AN OVE RRIDING EFFECT VISAVIS INCOME RECOGNITION PRINCIPLE UNDER THE COMP ANIES ACT. HENCE, SECTION 45Q OF THE RBI ACT SHALL HAVE OVERRI DING EFFECT OVER THE INCOME RECOGNITION PRINCIPLE FOLLOWED BY COOPER ATIVE BANKS. HENCE, THE ASSESSING OFFICER HAS TO FOLLOW THE RESE RVE BANK OF INDIA DIRECTIONS 1998, AS HELD BY THE HON'BLE SUPRE ME COURT. 10. THE HONOURABLE APEX COURT IN THE CASE OF UCO BA NK CASE (SUPRA) HAD AN OCCASION TO CONSIDER THE NATURE OF C BDT CIRCULAR AND HON'BLE APEX COURT HAS THUS HELD THAT BOARD HAS POWER, INTER ALIA, TO TONE DOWN THE RIGOUR OF THE LAW AND ENSURE A FAIR ENFORCEMENT OF ITS PROVISIONS, BY ISSUING CIRCULAR IN EXERCISE OF ITS STATUTORY POWERS UNDER SECTION 119 OF ACT WHICH ARE BINDING ON THE AUTHORITIES IN THE ADMINISTRATION OF THE ACT, I T IS A BENEFICIAL POWER GIVEN TO THE BOARD FOR PROPER ADMINISTRATION OF FISCAL LAW SO THAT UNDUE HARDSHIP MAY NOT BE CAUSED TO THE ASSESS EE AND THE FISCAL LAWS MAY BE CORRECTLY APPLIED. FURTHER A SIM ILAR ISSUE WAS RAISED ABOUT INTEREST ACCRUED ON A STICKY LOAN WH ICH WAS NOT RECOVERED BY THE ASSESSEE BANK FOR THE LAST THREE Y EARS AND TRANSFERRED TO THE SUSPENSE ACCOUNT, WOULD OR WOULD NOT BE ITA NO. 251/NAG/2015 5 INCLUDED IN THE INCOME OF THE ASSESSEE FOR THE PART ICULAR ASSESSMENT YEAR. HON'BLE APEX COURT HAS OBSERVED TH AT : THE METHOD OF ACCOUNTING WHICH IS FOLLOWED BY THE ASSESSEE BANK IS MERCANTILE SYSTEM OF ACCOUNTING. HOWEVER, THE ASSESSEE CONSIDERS INCOME BY WAY OF INTEREST PERTAINING TO DOUBTFUL LOANS AS NOT REAL I NCOME IN THE YEAR IN WHICH IT ACCRUES, BUT ONLY WHEN IT IS R EALIZED. A MIXED METHOD OF ACCOUNTING IS THUS FOLLOWED BY TH E ASSESSEE-BANK. THIS METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE IS IN ACCORDANCE WITH ACCOUNTING PRACTICE. THE ASSESSEES METHOD OF ACCOUNTING, TRANSFERRING THE DOUBTFUL DEBT TO AN INTEREST SUSPENSE ACCOUNT AND N OT TREATING IT AS PROFIT UNTIL ACTUALLY RECEIVED, IS I N ACCORDANCE WITH ACCOUNTING PRACTICE UP TO ASSESSMEN T YEAR 1978-79 THE TAXABILITY OF INTEREST ON DOUBTFUL DEBTS CREDITED TO SUSPENSE ACCOUNT WILL BE DECIDED IN THE LIGHT OF THE BOARDS EARLIER CIRCULAR DATED 6-10-1952, AS THE SAID CIRCULAR WAS WITHDRAWN ONLY IN JUNE,1978. THE NEW PROCEDURE UNDER THE CIRCULAR OF 9-10-1984 WILL BE APPLICABLE FOR AND FROM THE ASSESSMENT YEAR, 1979-8 0. ALL PENDING DISPUTES ON THE ISSUE SHOULD BE SETTLED IN THE LIGHT OF THESE INSTRUCTIONS. THEREFORE, UP TO THE ASSESSMENT YEAR 1978-79, THE CBDTS CIRCULAR OF 6-1 0- 1952 WOULD BE APPLICABLE; WHILE FROM THE ASSESSMENT YEAR 1979-80, THE CBDTS CIRCULAR OF 9- 10-1984 IS MADE APPLICABLE. IN THE PRESENT CASE, THE ASSESSMENT WAS MADE ON THE BASIS OF THE CBDTS CIRCULAR ON 9-10-19 84, SINCE THE ASSESSMENT PERTAINS TO THE ASSESSMENT YEA R 1981-82 TO WHICH THE CIRCULAR OF 9-10-1984 IS APPLI CABLE. IF, THE BOARD HAS CONSIDERED IT NECESSARY TO LAY DO WN A GENERAL TEST FOR DECIDING WHAT IS A DOUBTFUL DEBT, AND DIRECTED THAT ALL ASSESSING OFFICERS SHOULD TREAT SUCH AMOUNTS AS NOT FORMING PART OF THE INCOME OF THE ITA NO. 251/NAG/2015 6 ASSESSEE UNTIL REALIZED, THIS DIRECTION BY WAY OF A CIRCULAR CANNOT BE CONSIDERED AS TRAVELING BEYOND THE POWERS OF THE BOARD UNDER SECTION 119 OF THE INCOME TAX ACT. SUCH A CIRCULAR IS BINDING UNDER SECTION 119. THE CIRCUL AR OF 9- 10-1984, THEREFORE, PROVIDES A TEST FOR RECOGNIZING WHETHER A CLAIM FOR INTEREST CAN BE TREATED AS A DO UBTFUL CLAIM UNLIKELY TO BE RECOVERED OR NOT. THE TEST PRO VIDED BY THE SAID CIRCULAR IS TO SEE WHETHER, AT THE END OF THREE YEARS, THE AMOUNT OF INTEREST HAS, IN FACT, BEEN RE COVERED BY THE BANK OR NOT. IF IT IS NOT RECOVERED FOR A PE RIOD OF THREE YEARS, THEN IN THE FOURTH YEAR AND ONWARDS TH E CLAIM FOR INTEREST HAS TO BE TREATED AS DOUBTFUL CL AIM WHICH NEED NOT BE INCLUDED IN THE INCOME OF THE ASS ESSEE UNTIL IT IS ACTUALLY RECOVERED. IN THE PRESENT CASE , THE CIRCULARS WHICH HAVE BEEN IN FORCE ARE MEANT TO ENS URE THAT WHILE ASSESSING THE INCOME ACCRUED BY WAY OF INTEREST ON A STICKY LOAN, THE NOTIONAL INTEREST WHICH IS TRANSFERRED TO A SUSPENSE ACCOUNT PERTAINING TO DOU BTFUL LOANS WOULD NOT BE INCLUDED IN THE INCOME OF THE ASSESSEE, IF FOR THREE YEARS SUCH INTEREST IS NOT A CTUALLY RECEIVED. THE VERY FACT THAT THE ASSESSEE, ALTHOUGH GENERALLY USING A MERCANTILE SYSTEM OF ACCOUNTING, KEEPS SUCH INTEREST AMOUNTS IN A SUSPENSE ACCOUNT AND DOE S NOT BRING THESE AMOUNTS TO THE P&L A/C GOES TO SHOW THAT THE ASSESSEE IS FOLLOWING A MIXED SYSTEM OF ACCOUNT ING BY WHICH SUCH INTEREST IS INCLUDED IN ITS INCOME ON LY WHEN IT IS ACTUALLY RECEIVED. LOOKING TO THE METHOD OF ACCOUNTING SO ADOPTED BY THE ASSESSEE IN SUCH CASES , THE CIRCULARS WHICH HAVE BEEN ISSUED ARE CONSISTENT WIT H THE PROVISIONS OF SECTION 145 AND ARE MEANT TO ENSURE T HAT ASSESSEES OF THE KIND SPECIFIED WHO HAVE TO ACCOUNT FOR ALL SUCH AMOUNTS OF INTEREST ON DOUBTFUL LOANS ARE UNIFORMLY GIVEN THE BENEFIT UNDER THE CIRCULAR AND SUCH ITA NO. 251/NAG/2015 7 INTEREST AMOUNTS ARE NOT INCLUDED IN THE INCOME OF THE ASSESSEE UNTIL ACTUALLY RECEIVED IF THE CONDITIONS OF THE CIRCULAR ARE SATISFIED. THE CIRCULAR OF 9-10-1984, ALSO SERVES ANOTHER PRACTICAL PURPOSE OF LAYING DOWN A UNIFORM TEST FOR THE ASSESSING AUTHORITY TO DECIDE WHETHER THE INTEREST INCOME WHICH IS TRANSFERRED TO THE SUS PENSE ACCOUNT IS, IN FACT, ARISING IN RESPECT OF A DOUBTF UL OR STICKY LOAN. THIS IS DONE BY PROVIDING THAT NON-R ECEIPT OF INTEREST FOR THE FIRST THREE YEARS WILL NOT BE TREA TED AS INTEREST ON A DOUBTFUL LOAN. BUT IF AFTER THREE YEA RS THE PAYMENT OF INTEREST IS NOT RECEIVED, FROM THE FOURT H YEAR ONWARDS IT WILL BE TREATED AS INTEREST ON A DOUBTFU L LOAN AND WILL BE ADDED TO THE INCOME ONLY WHEN IT IS ACT UALLY RECEIVED. THERE IS NO INCONSISTENCY OR CONTRADICTIO N BETWEEN THE CIRCULAR SO ISSUED AND SECTION 145 OF T HE INCOME TAX 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 CIR CULAR, THEREFORE, CANNOT BE TREATED AS CONTRARY TO SECTION 145 OF THE INCOME TAX ACT OR ILLEGAL IN ANY FORM. IT IS ME ANT 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. TH E RELEVANT CIRCULARS OF CBDT CANNOT BE IGNORED. THE QUESTION IS NOT WHETHER A CIRCULAR CAN OVERRIDE OR DETRACT FROM THE PROVISIONS OF THE ACT; THE QUESTION IS WHE THER THE CIRCULAR SEEKS TO MITIGATE THE RIGOUR OF A PARTICUL AR SECTION FOR THE BENEFIT OF THE ASSESSEE IN CERTAIN SPECIFIE D CIRCUMSTANCES. SO LONG AS SUCH A CIRCULAR IS IN FOR CE IT WOULD BE BINDING ON THE DEPARTMENTAL AUTHORITIES IN VIEW OF THE PROVISIONS OF SECTION 119 TO ENSURE A UNIFOR M AND ITA NO. 251/NAG/2015 8 PROPER ADMINISTRATION AND APPLICATION OF THE INCOME TAX ACT. 11. THE LEARNED COUNSEL FOR RESPONDENT HAS PLACED R ELIANCE IN A CASE OF MERCANTILE BANK LTD., BOMBAY VS. THE COMMIS SIONER OF INCOME TAX, BOMBAY CITY III REPORTED IN (2006) 5 SC C 221, WHERE SIMILAR QUESTION WAS RAISED BEFORE THE APEX COURT. THE QUESTION WAS WHETHER THE ASSESSEE IS LIABLE TO BE TAXED UNDE R INCOME TAX ACT, 1961 IN RESPECT OF THE INTEREST ON DOUBTFUL AD VANCES CREDITED TO THE INTEREST SUSPENSE ACCOUNT. IN THIS CASE, THE UCO BANK'S CASE (SUPRA) WAS ALSO REFERRED AND THE HONBLE APEX COUR T HAS ALLOWED THE APPEAL TO THE EXTENT OF QUESTION RAISED AS AFOR ESAID. FURTHERMORE, THE RESPONDENT COOPERATIVE BANKS, AS U NDERSTOOD BY SECTION 43 C OF THE INCOME TAX ACT ON THE SCHEDULED BANK. 12. LEARNED COUNSEL FOR THE APPELLANTS/REVENUE PLAC ED RELIANCE ON THE JUDGMENT IN THE CASE OF SOUTHERN TECHNOLOGIES L TD. VS. JOINT COMMISSIONER OF INCOME TAX, COIMBTORE REPORTED IN 2 010 (2) SCC 548. HOWEVER, THIS JUDGMENT PERTAINS TO NON BANKING FINANCIAL COMPANIES. UCO BANK CASE (SUPRA) AND MERCANTILE BAN K (SUPRA) CASE SQUARELY APPLIES TO THE FACTS OF THE PRESENT C ASE AND ISSUES INVOLVED. WE THEREFORE, DO NOT FIND IT NECESSARY TO INTERFERE IN THE JUDGMENT OF THE APPELLATE TRIBUNAL. WE HOLD THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THESE APPEALS. 13. SO FAR AS INCOME TAX APPEAL NOS.53/2014 AND 54/ 2014 ARE CONCERNED, THE ISSUE WAS ALSO RAISED IN THE APPEALS BEFORE THE TRIBUNAL WITH REGARD TO THE ADDITION MADE BY THE AS SESSING OFFICER REPRESENTING THE FORFEITED DIVIDEND. THE LEARNED TR IBUNAL HAS RIGHTLY DEALT WITH THIS ISSUE AND OBSERVED THAT, UN CLAIMED DIVIDEND IN QUESTION AMOUNTS TO EXCESS PROVISIONS F OR DIVIDEND MADE BY THE ASSESSEE ON AN EARLIER OCCASION WHICH H AS BEEN REVERSED BY THE ASSESSEE IN THE YEAR UNDER CONSIDER ATION AND ITA NO. 251/NAG/2015 9 TRANSFERRED TO A RESERVE ACCOUNT. THE PROVISIONS FO R DIVIDEND MADE EARLIER WAS NOT A CHARGE ACTION PROFITS BUT IT WAS APPROPRIATION OF THE PROFITS AVAILABLE POST TAXATION. WE FIND NO ERR OR IN THE AFORESAID OBSERVATIONS. FURTHERMORE, IN THE APPEALS AS MENTIONED ABOVE, THE REVENUE HAS ONLY CHALLENGED THE DELETION OF THE ADDITIONS ON ACCOUNT OF THE INTEREST ON STICKY ADVA NCES ALONE. IN VIEW OF THIS, WE PROCEED TO PASS THE FOLLOWING ORDE R:- O R D E R 1. INCOME TAX APPEAL NOS.53/2014, 54/2014, 57/2014, 58/2014, 68/2014 ARE HEREBY DISMISSED. 2. IN THE FACTS AND CIRCUMSTANCES, THERE SHALL BE N O ORDER AS TO COSTS. 5. LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT TH E ISSUE IS ALSO COVERED BY THE DECISION OF CO-ORDINATE BENCH, NAGPU R OF THE TRIBUNAL IN THE CASE OF DCIT VS THE WASHIM URBAN CO.OP. BANK LTD. IN ITA NO.233/NAG/2013 VIDE ORDER DATED 05.06.2015 WHICH ARE EXTRACTED FO R READY-REFERENCE AS UNDER:- 7. THEREFORE, WE HEREBY CONCLUDE THAT IN A SITUATI ON WHEN THE BENCHES OF THE TRIBUNAL HAVE FOLLOWED THE DECISIONS OF HON'BLE HIGH COURTS AND HON'BLE SUPREME COURT, THEREFORE, THE DE CISION OF ITAT, LUCKNOW BENCH BEING ON DIFFERENT FACTS IS NOT APPLI CABLE ON THE FACTS OF THIS CASE, SPECIALLY WHEN THE RESPECTED COORDINA TE BENCH LUCKNOW (HAMIRPUR DIST. COOPERATIVE BANK 148 ITR 233) HAS A LSO ENDORSED THE VIEW OF SOUTHERN TECHNOLOGIES (SUPRA), AS PER THE F OLLOWING OBSERVATIONS: 'ACCRUAL (OR OTHERWISE) OF AN INCOME (OR EXPENDITUR E) IS MATTER OF FACT TO BE DECIDED SEPARATELY FOR EACH CASE, ON THE BASIS OF THE ASSESSMENT OF THE OBTAINING FACTS AND CIRCUMSTANCES . THE SAME CANNOT BE STATED AS AN ACCOUNTING POLICY - WHICH BY ITS VERY ITA NO. 251/NAG/2015 10 NATURE IS TO BE APPLIED UNIFORMLY, EXCEPT WHERE IT IS STATED IN BROAD TERMS, BEARING THE NECESSARY INGREDIENTS OF T HE QUALIFYING CRITERION, I.E. EXISTENCE OF A REASONABLE CERTAINTY AS TO ULTIMATE REALIZATION AT THE TIME OF RAISING THE CLAIM OR EVE N AS AT THE END OF THE ACCOUNTING PERIOD. CLEARLY, THE SAME WOULD R EQUIRE AN ASSESSMENT OF THE RELEVANT FACTS, AND INCOME TO THA T EXTENT SHALL NOT BE RECOGNIZED UNLESS THERE IS REASONABLE CERTAI NTY OF REALIZATION. THE SAME WOULD NECESSARILY REQUIRE EXA MINATION OF THE FACTS AND CIRCUMSTANCES OF EACH CASE, AND TAKIN G A DECISION HAVING REGARD THERETO. THIS STANDS ENDORSED BY THE HON'BLE APEX COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD . (SUPRA). THE ADOPTED ACCOUNTING POLICY, I.E., RECOGNIZING IN COME ON NPA ACCOUNTS ONLY SUBJECT TO REALIZATION, DOES NOT SERV E AS A VALID QUALIFYING CATEGORY AS THERE COULD BE OTHER MITIGAT ING FACTORS, MAKING IT REASONABLE TO EXPECT REALIZATION DESPITE THE ACCOUNT BEING A NPA. FURTHER, ON FACTS, IT IS FOUND THAT TH ERE HAS BEEN IN FACT RECOGNITION OF INCOME, AND THE ASSESSEE'S CLAI M IS ONLY QUA PROVISION FOR BAD AND DOUBTFUL DEBTS' WITH REFERENC E TO TOTAL ASSETS, INCLUDING THE INTEREST INCOME BOOKED AND DE BITED TO THE ACCOUNT OF RESPECTIVE BORROWER, AND QUA WHICH THE A SSESSEE IS ENTITLED TO AND HAS CLAIMED DEDUCTION U/S 36(1)(VII A)'. 8. AN ORDER OF ITAT, AHMEDABAD BENCH HAS ALSO BEEN BEFORE US PRONOUNCED IN THE CASE OF KARNAVATI COOPERATIVE BAN K 144 TTJ 769 (AHD.) WHEREIN THE IDENTICAL ISSUE HAS BEEN DEALT W ITH AT LENGTH AND THE CBDT INSTRUCTIONS HAVE ALSO BEEN CONSIDERED. I T IS ALSO WORTH TO MENTION THAT IN THIS DECISION AS WELL THE CASE OF S OUTHERN TECHNOLOGIES 320 ITR 77 (SC) HAS BEEN DISCUSSED AND FLOWED. WE HAVE ALSO NOTED THAT THE DECISION OF UCO BANK 237 ITR 889 (SC) WAS ALSO DISCUSSED FOR THE LEGAL PROPOSITION THAT A BENEFICIAL CIRCULAR IS NOT TO BE TREATED AS INCONSISTENT WITH THE PROVISIONS OF STATUTE AND BIN DING ON THE AUTHORITIES. ACCORDING TO THE HON'BLE COURT, THE I NTEREST IN RESPECT OF STICKY ADVANCES ARE TO BE TAXED ONLY WHEN ACTUALL Y RECEIVED AS PRESCRIBED BY CBDT CIRCULAR. ITA NO. 251/NAG/2015 11 8.1. THERE IS ONE MORE DECISION OF ITAT, BANGLORE B ENCH-B, BANGLORE BEARING ITA NO.1528/BANG/2013 ASSTT. YEAR 2009-10 O RDER DATED 13 TH OF FEB. 2015 PRONOUNCED IN THE CASE OF ACIT VS BAG ALOT DISTRICT CENTRAL COOPERATIVE BANK WHEREIN IT AS HELD THAT TH E COOPERATIVE BANK BEING GOVERNED BY RBI GUIDELINES, THE PROVISIO NS OF SECTION 43D OF THE ACT ARE ALSO APPLICABLE TO SUCH COOPERATIVE BANKS AND THERE IS NOTHING IN THE SECTION WHICH MAKES THE INTEREST INC OME OF COOPERATIVE BANK FROM NPAS TAXABLE ON ACCRUAL BASIS. 9. WE, THEREFORE, HOLD THAT THE DECISIONS AS CITED BEFORE US SQUARELY COVERED THE ISSUE IN FAVOUR OF THE ASSESSE E. WE HEREBY CONFIRM THE FINDING OF LEARNED CIT(A) AND DISMISS T HE GROUND OF THE REVENUE. 6. WHEN THIS IS POINTED OUT TO LD. SR.DR, HE FAIRLY CONCEDED THE POSITION THAT THE ISSUE IS COVERED BY THE JUDGEMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. DEOGIRI NAGARI SAHAKARI BANK LTD.(SUPRA). AFTER HEARING THE RIVAL CONTENTIONS AND GOING THROU GH THE FACTS AND PRECEDENTS (CITED SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE AO OF UNREALIZED NPA INTEREST IS WITHOU T BASIS AND HENCE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH MARCH, 2018. SD/- SD/- ( G.D.AGRAWAL ) (MAHAVIR SINGH ) HONBLE P RESIDENT J UDICIAL MEMBER DATED: 06 TH MARCH, 2018 *AMIT KUMAR* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), NAGPUR 4. THE CIT, NAGPUR 5. THE DR, BENCH, ITAT, NAGPUR BY OR DER ASSISTANT REGISTRAR ITAT, NAGPUR BENCH, NAGPUR