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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The Cross Appeals filed by the Assessee and Revenue are directed against the common order passed by the Commissioner of :-2-: & 54/Chny/2018 Income Tax (Appeals)-1, in dated 31.10.2017 for the assessment year 2012-13. Therefore, we heard both the appeals together and dispose them by this common order.
2. The Karur Vysya Bank Ltd., the assessee, is a banking company in private sector carrying on the business of banking. For the assessment year 2012-13, it filed its return of income on 29.09.2012 admitting the total income of Rs. 461.22 crores. Thereafter, the assessee filed two revised returns viz., on 07.02.2013 with a total income of Rs. 490.07 crores and on 26.03.2014 admitting re-revised total income of Rs. 481.23 crores. The Assessing Officer completed the assessment u/s. 143(3) on 31.03.2015 making various additions/ disallowances.
Aggrieved against that order, the assessee filed an appeal before the CIT(A). The Ld. CIT(A) partly allowed the appeal. Aggrieved against certain issues on which dismissal and enhancement were made and on certain issues wherein the Ld. CIT(A) has not decided the issue the assessee filed the above appeal. Similarly, aggrieved against those issues where the Ld. CIT(A) allowed the appeal, the Revenue filed its above cross appeal.
3. The Ld. AR submitted that since the securities of the assessee’s bank are held as stock in trade, the Ld. CIT (A) erred in disallowing and :-3-: & 54/Chny/2018 also enhancing the disallowance made u/s. 14A to Rs. 47,78,765/-, without appreciating the fact that no disallowance can be made u/s. 14A when the assessee has not incurred any expenditure for earning tax free income. The Ld. CIT(A) also erred in disallowing the sum u/s. 14A without recording the finding that the assessee bank had actually incurred expenditure in earning the tax free income. Further, the Ld. AR submitted that the AO has not recorded due satisfaction for invoking the jurisdiction u/s. 14A. In this regard, the ld AR relied on the orders of this tribunal in its own case in 2017 (4) TMI 566 –ITAT Chennai, 72 ITR (Trib) 26 (Chennai) (2019) and decision rendered in the case of Corporation Bank in dated 11.03.2015 for assessment year 2011-12. Further, the Ld. AR relied on the Calcutta ITAT decision in the case of ACIT vs UCO Bank in ITA NO. 1615/Kol/2016 & CO 51/Kol/2018 dated 21.08.2018 for ay 2012-13 and the Delhi ITAT decision in the case of Punjab National Bank vs CIT, Rnage-14, New Delhi in (2019) (1) TMI 689-ITAT Delhi and ITA Nos.
4253 & 2236/Del/2011, & 4722/Del/2012; ITA Nos.
2406/Del/2013; ITA nos. 2469/Del/2011; ITA No. 4718/Del/2012 and ITA Nos 2966/Del/2013 dated 09.01.2019, wherein the respective benches, applying the Apex Court decision in Maxopp Investment Ltd., and Pr. CIT vs State Bank of Patiala etc., held
:-4-: & 54/Chny/2018 that no disallowance u/s. 14A is permissible in terms of Rule 8D in case of assessee’s engaged in banking business.
4. Per contra, the Ld. DR submitted that the Ld. CIT(A) distinguished the decision of the ITAT on the following grounds. As per the balance sheet as on 31.03.2012, the total investment held by the bank was 10,506.09 crores. The average value of investment according to Rule 8D(2)(iii) was 90.12 crores. In the assessee’s case tax free income of Rs. 0.92 crores and investments have also yielded taxable income of Rs. 715.32 crores. Since, the treasury department of the assessee’s bank is managing this investments, which is yielding both taxable and non-taxable income, the CIT(A) required the assessee to file the details of expenses incurred by the treasury department. The assessee furnished such sum at Rs. 2.75 crores. The Ld. CIT(A) found that the proportion of investment in equity shares and preferential shares at 103.22 crores in comparison to total investment of Rs. 10,506.03 crores, which works out to 0.99 crores as on the last date of the accounting year. Therefore, the Ld. CIT(A) held that the assessee’s claim that no direct expenditure was incurred to earn, exempt income cannot be accepted, on assessee’s own admission that it has incurred Rs. 2.75 crores on the treasury department which was entrusted with the responsibility of managing the entire investment portfolio.
:-5-: & 54/Chny/2018 Therefore, the Ld. CIT(A) gave an enhancement notice to the assessee after considering its plea, held that since the proportion of investments giving raise to exempt income to the total investment was to the tune of 0.99%, the disallowable portion under rule 8D(2)(i) worked out at Rs. 2,72,366/- and hence he directed the AO to disallowance this sum.
Relying on the Supreme Court decision in the case of CIT vs Walfort Stock Brokers Pvt. Ltd., (2010) 326 ITR 1 (SC) and Godrej & Boyce Manufacturing Co. Ltd. vs DCIT and another (2017) 394 ITR 449 (SC), the CIT(A) held that section 14A is applicable in the assessee’s case and hence confirmed the disallowance made u/s.14A r.w.r. 8D(2)(ii) by the AO also. Thus, the Ld. CIT(A) has enhanced the disallowance. Thus, the Ld. DR supported the orders of the lower authorities.
We heard the rival submissions. Since the Ld. CIT(A) has drawn due satisfaction u/. 14A r.w.r. 8D, the assessee’s plea that no satisfaction was recorded u/s. 14A r.w.r. 8D has no merit. However, on the merits of the disallowance, the relevant portion of the order of this tribunal in the assessee’s case rendered in & 2326/Mds/2016 and ITA No. 2433 & 2649/Mds/2016 dated 29.03.2017 in the assessment year 2010-11 is extracted as under:
“8. We have heard the rival contentions and perused the orders. Claim of the assessee is that shares/units held by it whether classified as “investment” or “stock-in-trade” in balance sheet, that has to be considered as stock-in-trade only
:-6-: & 54/Chny/2018 for tax purpose, and Section 14A of the Act had no application. Circular No.18 dated 02.11.2015 of CBDT is reproduced hereunder:- “Subject: Interest from non-SLR securities of Banks – Reg. It has been brought to the notice of the Board that in the case of Banks, field officers are taking a view that, “expenses relatable to investment in non- SLR securities need to be disallowed u/s 57(i) of the Act as interest on non-SLR securities is income from other sources.”
Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income- tax under the head “Income from Other Sources”, if, the income is not chargeable to income-tax under the head “Profits and Gains of Business and Profession”.
The matter has been examined in the light of the judicial decisions on this issue. In the case of CIT v. Nawanshahar Central Cooperative Bank Ltd. [2007] 160 TAXMAN 48(SC), the Apex Court held that the investments 7 & 2326/Mds/16 I.T.A. Nos.2433 & 2649/Mds/16 made a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head “Profits and Gains of Business and Profession”. 3.2 Even though the abovementioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i) of the Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.
In the light of the Supreme Court’s decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all concerned.” (emphasis supplied)” CBDT itself has accepted the line of thinking that income from investment made by a banking concern is part of its business of banking to be considered under the head ‘Business and Profession’. Direct result of this view is that such investments would be only a part of stock-in-trade. In our opinion, how the assessee has treated the shares and mutual funds in its balance sheet prepared under Banking Regulation Act may not be relevant when the income therefrom is treated as a part of business profit and not under the head of ‘Income from other sources’. There is no case for the Revenue that assessee was holding these investments solely for the purpose of earning 8 I.T.A. Nos.2325 & 2326/Mds/16 I.T.A. Nos.2433 & 2649/Mds/16 dividend.
:-7-: & 54/Chny/2018 At para 17 of its judgment in the case of State bank of Patiala (supra), Hon'ble Punjab & Haryana High Court held as under:- “17. Under section 14A, an expenditure can be disallowed only if it is incurred by the assessee in relation to income exempt from tax. The dividend or interest from the assessee’s stock-in-trade i.e. the securities was exempt from tax in view of sections 10(15)(iv)(h),(34) and (35). This was incidental to its business of banking. The business income on account of the assessee trading in the securities is assessable under the head “Profits and gains of business or profession”. The expenditure incurred in relation to stock-in-trade arising as a result of investment in shares and debentures is deductible under sections 28 to 37.”
9. Once holding of investment was considered incidental to the business of banking to the assessee, in our opinion, Section 14A of the Act could not have been applied. Para 26 of the very same judgment is also relevant and it is reproduced hereunder:- “26. What is of vital importance in the above judgment are the observations emphasized by us. Each of them expressly states that what is disallowed is expenditure incurred to “earn” exempt income. The words “in relation to” in section 14A must be construed accordingly. Thus, the words “in relation to” apply to earning exempt income. The importance of the observation is this. We have held that the securities in question constituted the assessee’s stock- in-trade and the income that arises on account of the purchase and sale of the securities is its business income and is brought to tax as such. That income is not exempt from tax and, therefore, 9 & 2326/Mds/16 I.T.A. Nos.2433 & 2649/Mds/16 the expenditure incurred in relation thereto does not fall within the ambit of section 14A. Now, the dividend and interest are income. The question then is whether the assessee can be said to have incurred any expenditure at all or any part of the said expenditure in respect of the exempt income viz. dividend and interest that arose out of the securities that constituted the assessee’s stock-in-trade. The answer must be in the negative. The purpose of the purchase of the said securities was not to earn income arising therefrom, namely, dividend and interest, but to earn profits from trading in i.e. purchasing and selling the same. It is axiomatic, therefore, that the entire expenditure including administrative costs was incurred for the purchase and sale of the stock-intrade and, therefore, towards earning the business income from the trading activity of purchasing and selling the securities. Irrespective of whether the securities yielded any income arising therefrom, such as, dividend or interest, no expenditure was incurred in relation to the same.” We are, therefore, of the opinion that disallowance under Section 14A of the Act could not have been made in the assessee’s case for investments which :-8-: & 54/Chny/2018
were considered as part of stock-in-trade for tax purposes. Such disallowance therefore stands deleted.” Subsequent to this decision in the assessee’s case, the Kolkata Bench of the ITAT in the case of UCO Bank in & CO 51/Kol/2018 dated 21.08.2018 for ay 2012-13 and the Delhi Bench of the ITAT in the case of Punjab National Bank vs CIT, Rnage-14, New Delhi in (2019) (1) TMI 689-ITAT Delhi and ITA Nos. 4253 & 2236/Del/2011, ITA Nos. 1788 & 4722/Del/2012; ITA Nos.
2406/Del/2013; ITA nos. 2469/Del/2011; ITA No. 4718/Del/2012 and ITA Nos 2966/Del/2013 dated 09.01.2019, on due analysis of the Supreme Court decisions in the case Maxopp Investment Ltd. Vs CIT 402 ITR 640 including the decision of Pr. CIT vs State Bank of Patiala etc., held that no disallowance u/s. 14A is permissible in terms of Rule 8D where the assessee’s are engaged in banking business. Since, the assessee is engaged in the business of banking, therefore, following the above decisions we hold that no disallowance can be made u/s. 14A and hence allow the assessee’s appeal. The corresponding grounds of the assessee are allowed.
The Ld. AR submitted that the Ld. CIT(A) erred in disallowing and also enhancing the disallowance of the assessee’s claim u/s. 36(1)(vii) by substituting the computation of income from eligible business
:-9-: & 54/Chny/2018 without pointing out any defects in method adopted by the assessee.
While doing so, the Ld. CIT(A) erred in considering the business income of assessee at Rs. 516.83 crores for arriving at the deduction u/s. 36(1)(vii). The Ld. CIT(A) also failed to appreciate the fact that the business income of the bank comprises income from various sources of business not related to eligible business and failed to appreciate the fact that the method of computation adopted by the assessee is the most appropriate method. In this regard, he relied on the decision of the Bangalore Tribunal in the case of Canara Bank (2017) 60 ITR (Trib) 1 (Bengluru).
Per contra, the Ld. DR submitted that the assessee claimed before the AO that it being a banking company engaged in providing long term finance to industrial, agricultural and development of infrastructure facilities in India (called eligible business) is eligible to claim deduction of 20% of the profits from this eligible business. Since, there is no prescribed method in the Income Tax Act, for arriving at the profits from the eligible business, the assessee bank had adopted a method in which cash profit was arrived at and proportionate amount was claimed as deduction u/s. 36(1)(vii). While making the assessment, the AO recalculated the profit from eligible business and allowed only Rs. 28,21,04,781/- as deduction against the claim of Rs. 35 crores made
:-10-: & 54/Chny/2018 by the assessee. On appeal, the CIT(A) found that the assessee bank made its first claim u/s. 36(1)(vii) in the assessment year 2009-10 and adopted different methods for computation of its eligibility u/s. 36(1)(vii) for assessment years 2010-11 & 2011-12. During this assessment years, it changed its earlier method (Old method) and adopted a different method (new method). Therefore, the Ld. CIT(A) required the assessee to file a copy of computation statement adopting the old method, he found that as per the new method, the assessee claimed deduction at Rs. 35.93 crores. However, under the old method it worked out to just Rs. 25.82 crores. Therefore, the Ld. CIT(A) held that, prime facie, the assessee had inflated its claim by adopting different method of computation for this claim in comparison to the method adopted in the earlier years viz., ay 2010-11 & 2011-12 and the new method does not correctly reflect the profits from the eligible business. Therefore, the Ld. CIT(A) issued notice for enhancement.
The assessee filed the revised computation claiming deduction u/s. 36(1)(vii) at Rs. 34,41,12,325/- only as against Rs. 35,93,12,994/- claimed originally. Thereafter, the Ld. CIT(A) found that the method employed by the assessee bank, the computation and the consequent claim of deduction u/s. 36(1)(vii) as per its revised computation is not in accordance with provisions of section 36(1)(vii) r.w.s. 29 apart from being unscientific. Therefore, he recomputed the deduction at Rs.
:-11-: & 54/Chny/2018 22.94 crores only. Thus, he enhanced the income at Rs. 5,26,32,261/-.
Thus, the Ld. DR supported the order of the Ld. CIT(A).
We heard the rival submissions. It is clear from the above, that the assessee followed a particular method of accounting for claiming the impugned deduction during the period relevant to assessment years 2010-11 & 2011-12. The Revenue has not accepted the method employed by the assessee. Ultimately, the assessee filed appeals before the ITAT and the ITAT has remitted the matter back to the AO to examine the issue afresh in accordance with law for the assessment years 2010-11 & 2011-12. While, this issue is pending before the AO for the ays 2012-13, the Ld. CIT(A) during the appeal proceedings for this ay i.e., 2012-13, obtained certain details and found that the assessee has adopted a different method of computation for arriving the deduction u/s. 36(1)(vii) and therefore, he recomputed the deduction in his order. Thus, the assessee has adopted two different methods for which the assessee could not give the reason and satisfy the appellate authority. The method adopted by the assessee in the earlier year itself has been remitted back to the AO by this ITAT for him to examine the issue afresh in accordance with law. Therefore, the case law relied by the assessee is of no help to it. On the above facts and circumstances, we deem it fit to remit this issue back to the AO for a fresh examination
:-12-: & 54/Chny/2018 in accordance with law. The assessee shall place all material in support of its contentions before the A O and comply with the requirements of the A O in accordance with the law. The AO is also at liberty to conduct appropriate enquiry as deemed fit. However, the AO shall offer effective opportunity to the assessee on the material etc., to be against it and thereafter pass appropriate order in accordance with law.
The Ld. AR submitted that the Ld. CIT(A) erred in not adjudicating the assessee’s ground relating to the deduction u/s. 36(1)(vii)(a) citing no tax effect on the issue on the same lines of this order for assessment year 2010-11 & 2011-12. In this regard, he relied on this tribunal decision in its own case (2019) 72 ITR (Trib) 26 (Chennai) and Uttarbanga Kshetriya Gramin Bank (2018) 408 ITR 393 (Cal).
9.1 On the above issue, the Revenue has also filed cross appeal pleading that the Ld. CIT(A) ought to have considered the provisional figures of census data available on first day of relevant financial year, while allowing deduction claimed by the assessee u/s. 36(1)(viia) of the Act, following the decision of the Hon’ble High Court of Karnataka in the :-13-: & 54/Chny/2018 case of State Bank of Mysore vs ACIT (ITA No 6-7 of 2009 dated 09.01.2015.
In this regard, the Ld. AR invited our attention to the copy of the letter issued by Deputy Director & CPIO in RTI-09/01/2018- 19/CD(Cen) dated 24.05.2018 to the Chief Manager, wherein the following observations were made :
a. As regards point no.1 of your application, it is submitted that the village level population data was not released on 31.03.2011 in respect of Census 2011. b. In respect of point nos. 2 & 3 of your application, it is informed that the date of release of first and final population data of Census 2011 is 30.04.2013 which included information upto village level in rural areas and upto ward level in urban areas. and submitted that the Ld. CIT(A) may be directed to dispose the assessee’s appeal on merits.
We heard the rival submissions. The A O while finalising the assessment did not agree with the method of computation adopted by the assessee for claiming the deduction u/s. 36(1)(viia) and he adopted a different method of computation. On appeal, the Ld. CIT(A) held that by adopting the different method, the AO arrived at the same figure of Rs. 90.08 crores as an allowable amount. Therefore, he held that the asseesee’s appeal is purely academic having no tax impact.
He also held that the computation of average aggregate advances
:-14-: & 54/Chny/2018 made by the assessee bank’s “Rural Branches” have not been properly computed in as much as some of the branches claimed as “Rural Branch” do not clearly fall within the definition of “Rural Branch” given in Explanation (ia) to section 36(1)(viia) of the I.T. Act. However, it was found that even after the advances made to such non “Rural Branches” are excluded from the average advances made by the “Rural Branches” claimed by the assessee, the claim of the assessee at Rs. 19,08,77,607/- would still be admissible. Therefore, the Ld. CIT(A) has not decided the issue on merits. Aggrieved against that decision, the assessee is on appeal before us. In the facts and circumstances, since the matter has been not dealt by the Ld. CIT(A), we remit this issue back to the Ld. CIT(A). The assessee shall lay all relevant material on which it relies in support of its contentions before the Ld. CIT(A) and shall comply with his requirements in accordance with law. The ld CIT (A) after giving effective opportunity to the assessee /A O , as the case may be, decide the issue in accordance with law. Thus, the corresponding grounds of the assessee as well as Revenue are treated as partly allowed.
The Ld. AR submitted that the Assessing Officer erred in not considering the assessee’s claim for provision on leave encashment.
Since, the Ld. AO failed to dispose the claim made during the :-15-: & 54/Chny/2018 assessment proceedings, this matter was taken up before the Ld. CIT(A). The Ld. CIT(A), however, dismissed the appeal without considering the assessee’s plea. However, the Ld. AR fairly conceded that this tribunal has decided this issue against the assessee in its own case (2019) 72 ITR (Trib) 26, Chennai.
Per contra, the Ld. DR submitted that the assessee bank created a provision for leave encashment on retirement at Rs. 6,81,00,000/-. Since, provision is not admissible u/s. 43B(f), the assessee itself disallowed this sum in its computation of taxable income enclosed along with the return. However, it claimed Rs. 3,03,67,103/- as deductible amount on actual payment basis. The AO allowed this sum. However, before the AO, a fresh claim was made for the deduction of Rs. 3,77,32,897/-, the difference between provision for leave encashment on retirement i.e., Rs. 6,81,00,000/- and the actual payment made towards leave encashment on retirement. The AO did not consider. Aggrieved, the assessee filed appeal before the CIT(A).
The Ld. CIT(A) apart from relying on the Supreme Court order of Staying the operation of the order of Calcutta High Court decision in the case of M/s. Exide Industries Ltd. SLP (Civil) C.C. No. 12060 of 2008 dated 08.09.2008 held that the assessee’s original claim was correct in as much as it had on its own disallowed the provision for leave
:-16-: & 54/Chny/2018 encashment on retirement to the extent of Rs. 6,81,00,000/- and had claimed deduction of Rs. 3,03,67,103/- on actual payment basis.
Therefore, the Ld. CIT(A) held that there is no merit in the assessee’s claim of additional sum of Rs. 3,37,32,897/-. Therefore, we do not find any reason to interfere with the order of the Ld. CIT(A) and hence the corresponding grounds of the assessee are dismissed.
Revenue’s Appeal in ITA 3197/Chny/ 2017 :
The Ld. DR submitted that the Ld. CIT(A) erred in deleting the disallowance on stale draft account at Rs. 3,23,82,457/- quoting the “The Depositor Education and Awareness Fund Scheme, 2014”of the RBI guideline. Per contra, the Ld. AR supported the order of the Ld. CIT(A) and relied on this tribunal decision in its case in 72 ITR (Trib)
26 (Chennai), the relevant portion is extracted as under :
“18. Ground No.8 challenges the direction of ld. CIT(A) to deal with the additions unclaimed balance of Rs. 1,12,00,000/-. 18.1 The brief facts relating to this issue as under: The customers of the assessee-bank taking demand draft/pay order in favour of various parties but this demand drafts/payee orders are not encashed within a period of six months and they are accounted under the stale draft head. It is stated that the payee of the demand draft can encash any time/pay orders bank even after lapse of ten years subject to validation by the issued bankers and some of the SBI saving banks and current bank customers, which are not operated the bank accounts are kept under inoperative accounts and the balance is transferred to the unclaimed balance account. The amounts of stale account transferred during the year under :-17-: & 54/Chny/2018 consideration is Rs. 1,12,00,000/-. The AO is of the opinion that this amount is taxable. On appeal before us the ld. CIT(A) held that the amount cannot be brought to tax as a cessation of trading liability u/s. 41(1) of the Act, where the appellant had not written off the liability placing reliance on the decision of co-ordinate Bench of the Tribunal, Chennai in the case of City Union Bank Ltd. (supra), allowed the same. 18.2 Being aggrieved, the Revenue is in appeal before us in the present appeal. It is contended that in the light of decision of Hon'ble Supreme Court in the case of CIT v. T.V. Sundaram Iyengar [1996] 222 ITR 344 (SC), the balance lying on unclaimed balance account in the bank more than three years ought to be taxed as an income. On the other hand, the ld. Authorised Representative of assessee submitted that the issue is covered in favour of the assessee company by Karnataka High Court in the case of Karnataka Vikas Gramena Bank 2015 (12) TMI 1420 (supra), wherein the Hon'ble Karnataka High Court held that the decision of Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar (supra) cannot be applied to the present claim. In the light of the above decision, we do not find any merit in the grounds of appeal No.8 filed by the Revenue. 18.3 In the result, the appeal filed by the Revenue in is dismissed.”
Following the co-ordinate bench decision, supra, we do not find merit in the Revenue’s appeal, therefore, the corresponding grounds are dismissed .
The Ld. DR submitted that the Ld. CIT(A) erred in deleting the disallowance of ex-gratia payment following the decision of the CIT vs Maina Ore Transport Pvt. Ltd., 324 ITR 100 (Bom) and Kumaran Mills Ltd vs CIT (2000) 241 ITR 564 (Mad) which are distinguishable and not applicable to this case. Per contra, the Ld. AR supported the order of :-18-: & 54/Chny/2018 the Ld. CIT(A) and relied on this tribunal decision in its case in 72 ITR (Trib) 26 (Chennai), the relevant portion is extracted as under :
“24. Ground No.4 challenges the disallowance of ex-gratia payment of Rs. 4,46,29,688/-. We dealt with this issue in assessee’s own case in for AY 2007-08 for the reasons stated vide para 6.3 of the order therein, we allow this ground of appeal in favour of the assessee- bank. We direct the AO to allow the ex-gratia of Rs. 4,46,29,688/- as a deduction. Hence, this ground of appeal is allowed. 24.1 In the result, ground of appeal No.4 of the assessee is allowed. “
Following the co-ordinate bench decision, supra, we do not find merit in the Revenue’s appeal, therefore, the corresponding grounds are dismissed .
The Ld. DR submitted that the Ld, CIT(A) erred in deleting disallowance on interest accrued on NPAs to the extent of Rs. 57,42,500/- quoting the RBI guidelines. In this regard, the Ld. AR supported the order of the Ld. CIT(A) and relied on this tribunal decision Per contra, the Ld. AR supported the order of the Ld. CIT(A) and relied on the SC decision in the case of Vasisth Chary Vyapar Ltd TMI 56 SC and this tribunal decisions in its case in , TMI 566- ITAT , Chennai, 72 ITR (Trib) 26 (Chennai), the relevant portion is extracted as under :
“29. The next ground of appeal challenges the addition on account of interest accrued in NPAs accounts of Rs. 14,00,000/-. The AO had brought to tax the interest on the NPAs accounts by holding that interest had :-19-: & 54/Chny/2018 accrued in terms of the agreement entered by the appellant with borrowers. This issue is now covered in favour of the assessee-bank by decision of Hon'ble Supreme Court in the case of CIT v. Vasisth Chay Vyapar Ltd. [2019] 410 ITR 244 (SC), wherein the Hon'ble Supreme Court had confirmed the decision of Hon'ble Delhi High Court, that the interest income cannot be said to have been accrued to the assessee on the NPA accounts. Accordingly, we direct the AO to delete the addition of Rs. 14,00,000/- made on interest on NP accounts. Accordingly, this ground of appeal stands allowed. 29.1 In the result, the appeal filed by the assessee-bank is partly allowed.”
Following the co-ordinate bench decision, supra, we do not find merit in the Revenue’s appeal, therefore, the corresponding grounds are dismissed .
In the result, the assessee’s appeal in and the Revenue’s appeal in are treated as partly allowed for statistical purpose.
Order pronounced on 10th January, 2020 at Chennai.