THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. RAJKOT PEOPLES CO-OP. BANK LTD.
What did the High Court hold?
The High Court held that no question of law arises from the ITAT's order. The Court referred to its prior decision in Principal Commissioner of Income-Tax v. Shri Mahila Sewa Sahakari Bank Limited, which dealt with a similar issue concerning accrued interest on NPAs for a cooperative bank following the mercantile system of accounting. In that precedent, the Division Bench had dismissed the Revenue's appeal. Therefore, following its own established precedent, the High Court found no merit in the Revenue's appeals. The appeals were dismissed on the grounds that they did not raise a substantial question of law.
What were the facts?
The Revenue, represented by the Principal Commissioner of Income Tax, has filed these Tax Appeals challenging the order of the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, dated January 19, 2018. The appeals pertain to Assessment Year 2007-2008. The assessee, Rajkot Peoples Co-op. Bank Ltd., a cooperative bank, had claimed a deduction for accrued interest on non-performing assets (NPAs). The Assessing Officer objected, contending that as the bank followed the mercantile system of accounting, such interest should be added back. The ITAT ruled in favor of the assessee, leading to the present appeals by the Revenue.
What were the issues?
1. Whether the Appellate Tribunal has erred in law on facts in deleting the addition made on account of accrued interest on NPA on accrual basis? The Revenue contends that since the assessee bank follows the mercantile system of accounting, accrued interest on NPAs should be added back. The assessee, on the other hand, argued that the ITAT's decision to delete the addition was correct. The judgment notes that a similar issue was decided by this Court in the case of Principal Commissioner of Income-Tax v. Shri Mahila Sewa Sahakari Bank Limited, reported in [2017] 395 ITR 324 [Guj.], where the Revenue's appeal was dismissed.
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Rajkot Bench, Rajkot
“Whether the Appellate Tribunal has erred in law on facts in deleting the addition made on account of accrued interest on NPA on accrual basis ?”
The respondent-assessee is a Cooperative Bank. For AY 2007- 2008, the return filed by the assessee was taken in scrutiny. The Assessing Officer objected to the Bank having claimed deduction of the accrued interest on non-performing assets. According to the Assessing Officer, since the Bank was following mercantile system of accounting, such interest had to be added. The issue was ultimately decided by the Tribunal against the Revenue, upon which this appeal is filed.
Such issue had come up before this Court in the case of Principal Commissioner of Income-Tax v. Shri Mahila Sewa Sahakari Bank Limited, reported in [2017] 395 ITR 324 [Guj.], whereby Division Bench had dismissed Revenue’s appeal by a detailed judgment.
No question of law, therefore, arises. Tax Appeals are dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash
Recent GST High Court judgments
Search GST case law →- M/S Kotdwar Steel Limited vs. Office Of Hte Deputy CommissionerUttarakhand · 28 Oct 2026
- M/S Kotdwar Steel Limited vs. Office Of The Deputy CommissionerUttarakhand · 28 Oct 2026
- M/S Kotdwar Steel Limited vs. Office Of The Deputy CommissionerUttarakhand · 28 Oct 2026
- Vandemataram Projects Private Limited vs. Raipur Development AuthorityChhattisgarh · 27 Oct 2026
- M/S Surya Prakash Aroma vs. State Of Uttar Pradesh And 2 OthersAllahabad · 27 Oct 2026
