COMMISSIONER OF INCOME TAX SURAT 1 vs. GUJARAT INDUSTRIAL CO OPERATIVE BANK LTD

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TAXAP/386/2018HC GujaratGJHC24022641201825 April 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises in the present appeals. The Court referred to its own decision in the case of Principal Commissioner of Income-Tax v. Shri Mahila Sewa Sahakari Bank Ltd. reported in [2017] 395 ITR 324 (Guj), which has settled this issue. The Tribunal had followed this precedent. Therefore, the deletion of the addition by the Tribunal was upheld. The operative direction was the dismissal of the Tax Appeals. No issue was expressly left undecided.

What were the facts?

The Revenue is in appeal against the order of the Income Tax Appellate Tribunal (ITAT) dated May 1, 2017. The appeal concerns the assessment year(s) not explicitly stated but implied to be related to the ITAT's order. The dispute revolves around the deletion of an addition of Rs. 70,90,165, representing interest receivable on Non-Performing Assets (NPAs). The Assessing Officer had made this addition, but the ITAT deleted it. The procedural history involves the Assessing Officer's addition, the assessee's appeal to the ITAT, and the Revenue's subsequent appeal to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law and on facts in deleting the addition made by the Assessing Officer of interest receivable on NPAs of Rs. 70,90,165, without appreciating that the assessee failed to prove the uncertainty of realization of interest income and the Assessing Officer rightly made the addition of interest receivable of Rs. 70,90,165 on loans/advances which have become NPAs for a period less than three years? (Question of law and mixed fact and law, concerning the taxing of interest on doubtful accounts). Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Assessing Officer rightly made the addition of interest receivable on NPAs as the assessee failed to prove the uncertainty of realization. The addition was made on loans/advances that had become NPAs for less than three years.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/386/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 386 of 2018 With R/TAX APPEAL NO. 387 of 2018 ========================================================== COMMISSIONER OF INCOME TAX SURAT 1 Versus GUJARAT INDUSTRIAL CO OPERATIVE BANK LTD ========================================================== Appearance: MR.NIKUNT RAVAL, ADVOCATE for MRS KALPANAK RAVAL(1046) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 25/04/2018

COMMON ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

Since   these   Tax   Appeals   arise   in   common background, we may take Tax Appeal No.386 of 2018 as the lead matter.

2.

Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   01.05.2017 raising following question for our consideration: “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is  right   in law  and  on  facts   in deleting   the addition   made   by   the   Assessing   Officer   of Interest   receivable   on   NPAs   of   Rs.70,90,165/­ without appreciating the facts that the assessee failed   to   prove   uncertainty   of   realization   of interest   Income   and   the   Assessing   Officer C/TAXAP/386/2018 ORDER rightly made addition of interest receivable of Rs.70,90,165/­   on the loan/advances  which  have become NPAs for a period less than three years ?

3.

The issue pertains to taxing of interest on the deposits which have become doubtful.  In other words, the Revenue wanted to tax the interest on notional basis   when   the   account   itself   had   become   NPA   and

therefore under doubtful recovery.

4.

This Court in case of Principal Commissioner of Income­Tax   v.   Shri   Mahila   Sewa   Sahakari   Bank   Ltd. reported in [2017] 395 ITR 324 (Guj) has settled this issue which the Tribunal followed.

5.

No   question   of   law   arises.     Tax   Appeals   are dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH

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