THE DCIT., CIRCLE-2(1)., VIJAYAWADA., Vijayawada V. M/s The Gandhi Co-operative Urban Bank Limited, Vijayawada

ITA 469/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0193 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NO.469/VIZAG/2012 ( / ASSESSMENT YEAR : 2009-10 ) DCIT CIRCLE-2(1) VIJAYAWADA VS. THE GANDHI CO-OP. URBAN BANK LTD. VIJAYAWADA [ PAN: AAAAT8072G ] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI M.N. MURTHY NAIK, DR -., / / RESPONDENT BY : SHRI C. SUBRAHMANYAM, AR / 3 / DATE OF HEARING : 03.11.2015 / 3 / DATE OF PRONOUNCEMENT : 30.11.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE, IS DIRECTED AGAI NST THE ORDER OF CIT(A), VIJAYAWADA DATED 27.8.2012 FOR THE ASSESSME NT YEAR 2009-10. ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE IS A CO-OPERATIVE BANK FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 29.9.2009 DECLARING TOTAL INCOME OF ` 1,96,45,690/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER CALLED AS THE ACT) ON 23.10.2010. THE CASE WAS SELECTED FO R SCRUTINY AND NOTICE U/S 143(2) OF THE ACT DATED 19.8.2010 WAS ISSUED. IN RESPONSE TO NOTICE ISSUED U/S 143(2) OF THE ACT, THE ASSESSEES AUTHOR ISED REPRESENTATIVE SHRI T.S. RAM MOHAN RAO APPEARED FROM TIME TO TIME AND FURNISHED THE INFORMATION/DOCUMENTS CALLED FOR. THE ASSESSING OF FICER, AFTER EXAMINING THE BOOKS OF ACCOUNTS AND OTHER INFORMATI ON FURNISHED, COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AND DETERMINED TOTAL INCOME AT ` 3,72,77,956/- AS AGAINST THE RETURNED INCOME OF ` 1,96,45,690/-, THEREBY MADE ADDITIONS TOWARDS INTER EST ON NON- PERFORMING ASSETS (NPAS), PROVISION FOR EDUCATION F UND, PROVISION FOR BAD AND DOUBTFUL DEBTS, ETC. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE CHALLENGED THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCO UNT OF INTEREST ON NPAS. THE CIT(A), AFTER CONSIDERING THE EXPLANATIO NS FURNISHED BY THE ASSESSEE DELETED THE ADDITIONS MADE BY THE ASSESSIN G OFFICER. AGGRIEVED ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 3 BY THE CIT(A)S ORDER, THE REVENUE IS IN APPEAL BEF ORE US AND RAISED THE FOLLOWING GROUNDS: 1. THE ID. CIT(A) ERRED BOTH IN LAW AND IN FACTS OF TH E CASE. 2. THE ID. CIT(A) IS NOT CORRECT IN DELETING THE ADDIT ION OF INTEREST ON NPAS CONSIDERING THE PROVISIONS OF SECT ION 43D OF THE I.T. ACT, 1961. 3. THE ID CIT(A) OUGHT TO HAVE CONSIDERED THE BOARD'S INSTRUCTION NO.17 OF 2008, DT.26111/2008 WHEREIN IT WAS STATED THAT BANKS HAVE TO FOLLOW THE MERCANTILE SYSTEM OF ACCOU NTING AND PREPARE ACCOUNTS ON ACCRUAL BASIS. 4. THE ID CIT(A) OUGHT TO HAVE ACCEPTED THAT RBI GUIDE LINES DO NOT OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT A S HELD BY THE HON'BLE APEX COURT IN THE CASE OF SOUTHERN TECHNOLO GIES LTD. VS. JOINT COMMISSIONER OF INCOME TAX (320 ITR 5 77). 5. THE ID. CIT(A) OUGHT NOT TO HAVE DELETED THE ADDITI ON BASED ON THE DECISION OF HON'BLE ITAT IN THE CASE OF T.C.I. FINANCE LTD AS AGAINST THE SAME THE REVENUE FILED APPEAL BEFORE THE HON'BLE HIGH COURT OF A.P. WHICH IS PENDING. 6. THE ID. CIT(A) HAS ERRED IN DELETING THE INTEREST CH ARGED ON NPA'S EVEN THOUGH THE ASSESSEE IS FOLLOWING MERCANTILE SY STEM OF ACCOUNTING. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 4. THE LD. D.R. SUBMITTED THAT THE CIT(A) IS ERRED IN DELETING THE INTEREST ON NPAS. THE LD. D.R. FURTHER SUBMITTED TH AT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THER EFORE, ALL INCOMES AND EXPENDITURE ACCRUED DURING THE FINANCIAL SHOULD BE RECOGNIZED UNDER THE RELEVANT FINANCIAL YEAR ITSELF. THE LD. D.R. FURTHER ARGUED THAT THE BOARD HAS ISSUED INSTRUCTION NO.17 OF 2008 DATE D 26.11.2008 AND AS PER THE SAID INSTRUCTION, IT INSTRUCTED ALL ASSESSI NG OFFICERS ENSURE THAT ALL BANKS INCLUDING CO-OPERATIVE BANKS, SHOULD FOLLOW E ITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 4 THE LD. D.R. FURTHER SUBMITTED THAT UNDER THE RBI G UIDELINES, THE BANKS HAVE TO FOLLOW MERCANTILE SYSTEM OF ACCOUNTING AND PREPARE ITS ACCOUNTS ON ACCRUAL BASIS. UNDER THESE CIRCUMSTANCES, IT IS NOT CORRECT ON THE PART OF THE CIT(A) TO HELD THAT INTEREST ON NPAS IS TAXABLE ONLY ON RECEIPT BASIS, THEREFORE, REQUESTED TO UPHOLD THE O RDER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND, THE AUTHORISED REPRESENTATIVE OF THE ASSESSE, STRONGLY SUPPORTED THE ORDER OF THE CIT(A). THE A. R. FURTHER SUBMITTED THAT IN BANKING BUSINESS SOMETIMES A PARTICULAR LOA N BECOME STICKY AND THE RECOVERY OF PRINCIPAL ITSELF IS IN DOUBTFUL, TH EREFORE RECOGNIZING INTEREST ON NPAS IS NOT CORRECT. THE A.R. FURTHER SUBMITTED THAT ASSESSEE BEING A CO-OPERATIVE BANK IS BOUND TO FOLL OW THE REGULATIVE INSTRUCTIONS OF RBI AND AS PER THE GUIDELINES ISSUE D BY THE RBI TO COOPERATIVE BANKS ALL CO-OPERATIVE BANKS SHOULD FOL LOW PRUDENTIAL NORMS FOR INCOME RECOGNITION, ASSET CLASSIFICATION AND PR OVISIONING. THE ASSESSEE BEING A CO-OPERATIVE BANK BOUND TO FOLLOW THE GUIDELINES ISSUED BY THE RBI, HAS RECOGNIZED THE INTEREST ON N PAS ON RECEIPT BASIS. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE IS FOL LOWING THIS SYSTEM OF ACCOUNTING FOR RECOGNITION OF INTEREST ON NPAS CONS ISTENTLY FROM THE PAST SEVERAL YEARS. THEREFORE, THE A.O. IS NOT CORRECT IN BRINGING TO TAX THE ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 5 INTEREST ON NPAS ON ACCRUAL BASIS. THE A.R. FURTHE R SUBMITTED THAT GUIDELINES ISSUED BY THE RBI ARE OVER RIDE THE PROV ISIONS OF THE INCOME- TAX ACT. THEREFORE, THE ASSESSEE IS BOUND TO FOLLO W THE GUIDELINES ISSUED BY THE RBI RATHER THAN COMPLYING WITH THE PROVISION S OF THE INCOME-TAX ACT. THE A.R. FURTHER SUBMITTED THAT THE ISSUE INV OLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF ITAT, VISAKHAPA TNAM BENCH IN THE CASE OF DCIT VS. DURGA CO-OPERATIVE URBAN BANK LTD. , WHEREIN UNDER SIMILAR CIRCUMSTANCES, THE ITAT DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE ASSESSEE IS A CO-OPERATIV E BANK, REGULARLY FOLLOWING MIXED SYSTEM OF ACCOUNTING, WHEREIN IT IS FOLLOWING CASH SYSTEM FOR RECOGNIZING INTEREST ON LOANS AND ADVANC ES AND MERCANTILE SYSTEM OF ACCOUNTING FOR OTHER EXPENDITURES. AS ST ATED BY THE A.R., THE ASSESSEE IS BOUND TO FOLLOW THE GUIDELINES ISSUED B Y THE RBI FOR INCOME RECOGNITION, ASSET CLASSIFICATION AND PROVISIONING. THEREFORE, THE ASSESSEE FOLLOWING THE GUIDELINES ISSUED BY THE RBI DID NOT RECOGNIZE THE INTEREST ACCRUED TO THE NPAS. THE A.O. WAS OF THE OPINION THAT SINCE, THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, IT SHOULD RECOGNIZE THE INTEREST RELATABLE TO NPAS, TH EREFORE, MADE THE ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 6 ADDITIONS. THE CIT(A), BY RELIED UPON THE JUDGEMENT OF THE ITAT, HYDERABAD BENCH IN THE CASE OF TCI FINANCE LTD. VS. ACIT (2004) 91 ITD 573 AND ALSO THE HONBLE MADRAS HIGH COURT JUDG EMENT IN THE CASE OF CIT VS. ANNAMALAI FINANCE LTD. (2005) 275 ITR 45 1, HELD THAT WHEN THE PRINCIPAL AMOUNT ITSELF IS DOUBTFUL OF RECOVERY , IT CANNOT BE SAID THAT ANY INTEREST ACCRUED ON SUCH PRINCIPAL AMOUNT IS RE COVERABLE. AS THE APPELLANT IS FOLLOWING THE ESTABLISHED METHOD OF AC COUNTING AND RECOGNIZING THE INTEREST ON NPAS AT THE TIME OF REA LIZATION, THE A.O. IS NOT CORRECT IN TAXING THE INTEREST ON NPAS ON ACCRU AL BASIS. 7. WE HAVE GONE THROUGH THE REASON GIVEN BY THE CIT( A) AS WELL AS THE CASE LAWS RELIED UPON BY THE ASSESSEE. THE A.R . OF THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT THE ISSUE IS SQU ARELY COVERED BY THE DECISION OF ITAT VISAKHAPATNAM BENCH IN THE CASE OF DCIT VS. DURGA CO-OPERATIVE URBAN BANK LTD. (SUPRA). WE HAVE EXAM INED THE CASE LAW REFERRED BY THE A.R. IN THE LIGHT OF THE FACTS OF T HE PRESENT CASE AND FIND THAT THE ITAT, VISAKHAPATNAM BENCH IN THE ABOVE MEN TIONED CASE ON SIMILAR FACTS HELD THE ISSUE IN FAVOUR OF THE ASSES SEE. THE RELEVANT PORTION IS REPRODUCED AS UNDER: 10. TURNING TO THE FACTS OF THE CASE BEFORE US, TH E ASSESSEE HEREIN IS A COOPERATIVE BANK AND IT IS NOT IN DISPUTE THAT IT I S ALSO GOVERNED BY THE RESERVE BANK OF INDIA. HENCE THE DIRECTIONS WITH RE GARD TO THE PRUDENTIAL NORMS ISSUED BY THE RESERVE BANK OF INDIA ARE EQUALL Y APPLICABLE TO THE ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 7 ASSESSEE AS IT IS APPLICABLE TO THE COMPANIES REGIS TERED UNDER THE COMPANIES ACT. THE HON'BLE SUPREME COURT HAS HELD I N THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPRA), THAT THE PROVISION OF 45Q OF RESERVE BANK OF INDIA ACT HAS AN OVERRIDING EFFECT VIS-- VIS INCOME RECO GNITION PRINCIPLE UNDER THE COMPANIES ACT. HENCE SEC.45 Q OF THE RBI ACT SHALL H AVE OVERRIDING EFFECT OVER THE INCOME RECOGNITION PRINCIPLE FOLLOWED BY C OOPERATIVE BANKS ALSO. HENCE THE ASSESSING OFFICER HAS TO FOLLOW THE RESER VE BANK OF INDIA DIRECTIONS 1998, AS HELD BY THE HON I BLE SUPREME COURT. 10.1 BASED ON THE PRUDENTIAL NORMS, THE ASSESSEE HE REIN DID NOT ADMIT THE INTEREST RELATABLE TO NPA ADVANCES IN ITS TOTAL INCOME. THE HONBLE DELHI HIGH COURT IN THE CASE OF VASISTH CHAY VYAPAR LTD. (SUPRA) HAS HELD THAT THE INTEREST ON NPA ASSETS CANNOT BE SAID TO H AVE ACCRUED TO THE ASSESSEE. IN THIS REGARD, THE FOLLOWING OBSERVATIONS OF HON'BLE DELHI HIGH COURT IN THE ABOVE CITED CASE ARE RELEVANT: 'WHAT TO TALK OF INTEREST, EVEN THE PRINCIPLE AMOUN T ITSELF HAD BECOME DOUBTFUL TO RECOVER. IN THIS SCENARIO IT WAS LEGITIM ATE MOVE TO INFER THAT INTEREST INCOME THEREUPON HAS NOT 'ACCRUED'. THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT I S EQUALLY APPLICABLE TO THE ISSUE IN OUR HANDS. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY WITH THE DECISION OF THE LEARNED CIT (A) IN HOLDING THAT THE INTEREST INCOME RELATABLE ON NPA ADVANCES DID NOT ACCRUE TO THE ASS ESSEE. ACCORDINGLY WE UPHOLD HIS ORDER. 8. AN IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEF ORE THE ITAT PUNE BENCH IN THE CASE OF VAIDYANATH URBAN CO-OP. BANK L TD. VS. CIT IN ITA NO.413/PN/2014 DATED 31.3.2015, WHEREIN THE ITAT UN DER SIMILAR SET OF FACTS HELD AS UNDER: 10. TURNING TO THE FACTS OF THE CASE BEFORE US, TH E ASSESSEE HEREIN IS A COOPERATIVE BANK AND IT IS NOT IN DISPUTE THAT IT IS ALSO GOVERNED BY THE RESERVE BANK OF INDIA. HENCE THE DIRECTIONS WITH REGARD TO THE PRUDENTIAL NORMS ISSUED BY THE RESERVE BANK OF INDIA ARE EQUALLY APPLICABLE TO THE ASSESSEE AS IT IS APPLICABLE TO T HE COMPANIES REGISTERED UNDER THE COMPANIES ACT. THE HONBLE SUP REME COURT HAS HELD IN THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPR A), THAT THE PROVISION OF 45Q OF RESERVE BANK OF INDIA ACT HAS AN OVERRIDING EFFECT VIS--VIS INCOME RECOGNITION PRINCIPLE UNDER THE COMPANIES ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 8 ACT. HENCE SEC.45 Q OF THE RBI ACT SHALL HAVE OVERRI DING EFFECT OVER THE INCOME RECOGNITION PRINCIPLE FOLLOWED BY COOPER ATIVE BANKS ALSO. HENCE THE ASSESSING OFFICER HAS TO FOLLOW THE RESER VE BANK OF INDIA DIRECTIONS 1998, AS HELD BY THE HON'BLE SUPREME COU RT. BASED ON THE PRUDENTIAL NORMS, THE ASSESSEE HEREIN DID NOT ADMIT THE INTEREST RELATABLE TO NPA ADVANCES IN ITS TOTAL INCOME. THE HON'BLE DELHI HIGH COURT IN THE CASE OF VASISTH CHA Y VYAPAR LTD (SUPRA) HAS HELD THAT THE INTEREST ON NPA ASSETS CA NNOT BE SAID TO HAVE ACCRUED TO THE ASSESSEE. IN THIS REGARD, THE FO LLOWING OBSERVATIONS OF HON'BLE DELHI HIGH COURT IN THE ABO VE CITED CASE ARE RELEVANT: WHAT TO TALK OF INTEREST, EVEN THE PRINCIPLE AMOUNT ITSELF HAD BECOME DOUBTFUL TO RECOVER. IN THIS SCENARIO IT WAS LEGITIMATE MOVE TO INFER THAT INTEREST INCOME THERE UPON HAS NOT 'ACCRUED'. THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT I S EQUALLY APPLICABLE TO THE ISSUE IN OUR HANDS. ACCORDINGLY W E DO NOT FIND ANY INFIRMITY WITH THE DECISION OF THE LEARNED CIT (A) IN HOLDING THAT THE INTEREST INCOME RELATABLE ON NPA ADVANCES DID NOT ACCRUE TO THE ASSESSEE. ACCORDINGLY WE UPHOLD HIS ORDER.' FOLLOWING THE AFORESAID DISCUSSION, WHICH HAS BEEN RENDERED ON AN IDENTICAL ISSUE UNDER SIMILAR CIRCUMSTANCES, WE FIND NO REASONS TO INTERFERE WITH THE ULTIMATE CONCLUSION O F THE CIT(A) IN DELETING THE IMPUGNED ADDITION RELATING T O INTEREST INCOME IN RESPECT OF NPAS. 9. THE HONBLE SUPREME COURT OF INDIA, IN THE CASE OF UCO BANK VS. CIT HAD AN OCCASION TO CONSIDER THE ISSUE. THE HON BLE SUPREME COURT, WHILE DEALING WITH SIMILAR ISSUE HELD AS UNDER: THE METHOD OF ACCOUNTING WHICH IS FOLLOWED BY THE ASSESSEE-BANK IS MERCANTILE SYSTEM OF ACCOUNTING. HOWEVER, THE AS SESSEE CONSIDERS INCOME BY WAY OF INTEREST PERTAINING TO DOUBTFUL LO ANS AS NOT REAL INCOME IN THE YEAR IN WHICH IT ACCRUES, BUT ONLY WH EN IT IS REALISED. A MIXED METHOD OF ACCOUNTING IS THUS FOLLOWED BY TH E ASSESSEE-BANK. THIS METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE I S IN ACCORDANCE WITH ACCOUNTING PRACTICE. UP TO THE ASST. YR. 1978- 79, THE CBDT'S CIRCULAR OF 6TH OCT., 1952 WOULD BE APPLICABLE; WHI LE FROM THE ASST. ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 9 YR. 1979-80, THE CBDT'S CIRCULAR OF 9TH OCT., 1984 IS MADE APPLICABLE. IN THE PRESENT CASE, THE ASSESSMENT WAS MADE ON THE BASIS OF THE CBDT'S CIRCULAR OF 9TH OCT., 1984, SINCE THE ASSESS MENT PERTAINS TO ASST. YR. 1981-82 TO WHICH THE CIRCULAR OF 9TH OCT. , 1984, IS APPLICABLE. UNDER SUB-S. (2) OF S. 119, WITHOUT PRE JUDICE TO THE GENERALITY OF THE BOARD'S POWER SET OUT IN SUB-S. ( 1), A SPECIFIC POWER IS GIVEN TO THE BOARD FOR THE PURPOSE OF PROP ER AND EFFICIENT MANAGEMENT OF THE WORK OF ASSESSMENT AND COLLECTION OF REVENUE TO ISSUE FROM TIME TO TIME GENERAL OR SPECIAL ORDERS I N RESPECT OF ANY CLASS OF INCOMES OR CLASS OF CASES SETTING FORTH DI RECTIONS OR INSTRUCTIONS, NOT BEING PREJUDICIAL TO ASSESSEES, A S THE GUIDELINES, PRINCIPLES OR PROCEDURES TO BE FOLLOWED IN THE WORK RELATING TO ASSESSMENT. SUCH INSTRUCTIONS MAY BE BY WAY OF RELA XATION OF ANY OF THE PROVISIONS OF THE SECTIONS SPECIFIED THERE O R OTHERWISE. THE BOARD THUS HAS POWER, INTER AL/A, TO TONE DOWN THE RIGOUR OF THE LAW AND ENSURE A FAIR ENFORCEMENT OF ITS PROVISIONS, BY ISSUING CIRCULARS IN EXERCISE OF ITS STATUTORY POWERS UNDER S. 119 WH ICH ARE BINDING ON THE AUTHORITIES IN THE ADMINISTRATION OF THE ACT. U NDER S. 119(2)(A), HOWEVER, THE CIRCULARS AS CONTEMPLATED THEREIN CANN OT BE ADVERSE TO THE ASSESSEE. THUS, THE AUTHORITY WHICH WIELDS T HE POWER FOR ITS OWN ADVANTAGE UNDER THE ACT IS GIVEN THE RIGHT TO F OREGO THE ADVANTAGE WHEN REQUIRED TO WIELD IT IN A MANNER IT CONSIDERS JUST BY RELAXING THE RIGOUR OF THE LAW OR IN OTHER PERMISSI BLE MANNERS AS LAID DOWN IN S. 119. THE POWER IS GIVEN FOR THE PURPOSE OF JUST, PROPER AND EFFICIENT MANAGEMENT OF THE WORK OF ASSE SSMENT AND IN PUBLIC INTEREST. IT IS A BENEFICIAL POWER GIVEN TO THE BOARD FOR PROPER ADMINISTRATION OF FISCAL LAW SO THAT UNDUE HARDSHIP MAY NOT BE CAUSED TO THE ASSESSEE AND THE FISCAL LAWS MAY BE CORRECTL Y APPLIED. HARD CASES WHICH CAN BE PROPERLY CATEGORISED AS BELONGING TO A CLASS, CAN THUS BE GIVEN THE BENEFIT OF RELAXATION OF LAW BY ISSUING C IRCULARS BINDING ON THE TAXING AUTHORITIES. IF THE BOARD HAS CONSIDERED IT NECESSARY TO LAY DOWN A GENERAL TEST FOR DECIDING WHAT IS A DOUBTFUL DEBT , AND DIRECTED THAT ALL ITOS SHOULD TREAT SUCH AMOUNTS AS NOT FORMING P ART OF THE INCOME OF THE ASSESSEE UNTIL REALIZED, THIS DIRECTION BY W AY OF A CIRCULAR CANNOT BE CONSIDERED AS TRAVELLING BEYOND THE POWER S OF THE BOARD UNDER S. 119. SUCH A CIRCULAR IS BINDING UNDER S. 1 19. THE CIRCULAR OF 9TH OCT., 1984, THEREFORE, PROVIDES A TEST FOR RECO GNISING WHETHER A CLAIM FOR INTEREST CAN BE TREATED AS A DOUBTFUL CLA IM UNLIKELY TO BE RECOVERED OR NOT. 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGEMENTS DISCUSSED ABO VE, WE ARE OF THE VIEW THAT INTEREST ON A LOAN WHOSE RECOVERY IS DOUB TFUL AND WHICH HAS NOT BEEN RECOVERED BY THE ASSESSEE-BANK, BUT HAS BE EN KEPT IN A ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 10 SUSPENSE ACCOUNT AND HAS NOT BEEN BROUGHT TO THE P& L A/C OF THE ASSESSEE, COULD NOT BE INCLUDED IN THE INCOME OF TH E ASSESSE. THE CIT(A) RIGHTLY DELETED THE ADDITIONS TOWARDS INTERE ST ON NPAS. THERE IS NO ERROR OR INFIRMITY IN THE ORDER OF CIT(A). ACCO RDINGLY, WE DIRECT THE A.O. TO DELETE THE ADDITIONS MADE TOWARDS INTEREST ON NPAS. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH NOV15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 30.11.2015 VG/SPS / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT THE DCIT, CIRCLE-2(1), VIJAYAWADA 2. -., / THE RESPONDENT M/S. THE GANDHI CO-OPERATIVE URBAN BANK LIMITED, D.NO.29-36-21, MUSEUM ROAD, GOVERNORPET, VIJAYAWADA 3. : / THE CIT, VIJAYAWADA 4. : () / THE CIT(A), VIJAYAWADA 5. -, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM ITA NO.469/VIZAG/2012 THE GANDHI CO-OP. URBAN BANK LTD., VIJAYAWADA 11