When interest is not received and the possibility of recovery is almost Nil, the interest cannot be treated to have accrued, says ITAT

The Income Tax Appellate Tribunal (ITAT) has ruled that if interest is not received and has virtually no possibility of recovery, it cannot be considered as accrued income. This decision was made in appeals filed by the Revenue against a cooperative bank. The Tribunal dismissed the Revenue's appeals, upholding the deletion of additions made on account of interest on non-performing assets and interest accrued during liquidation.

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE
(Through Virtual Court)
BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
AND
SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER

ITA Nos.907 & 908/PUN/2018

Assessment Years : 2009-10 & 2010-11

The Assistant Commissioner of Income Tax,
Circle – 2, Solapur

Appellant

VS

Solapur Nagari Audyogik
Sahakari Bank Niyamit,
340-A, Sakhar Peth,
Solapur – 413005
PAN : AAATS5386B

Respondent

Assessee by : N O N E
Revenue by : Shri Mahadevan A.M. Krishnan

Date of Hearing : 06-07-2021

Date of Pronouncement : 26-07-2021

ORDER

Both these appeals by the Revenue against the separate common order dated 23-01-2018 passed by the Commissioner of Income Tax (Appeals)-7, Pune [„CIT(A)‟] for assessment years 2009-10 and 2010-11.

2. We find no representation on behalf of the assessee nor any application filed seeking adjournment. The assessee called absent and set ex-parte. Therefore, we proceed to hear the ld. DR and pass order basing on the material available on record.

3.We find the issues raised in both the appeals are similar basing on the same identical facts. The ld. DR requested to hear both the appeals together. On perusal of the record we note that the submissions of ld. DR are correct to the extent the issues raised in both the appeals are similar and based on the same identical facts. Therefore, we proceed to hear both the appeals together and to pass a common order for the sake of convenience.

4.The Revenue raised 6 grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in deleting the addition made on account of interest on non performing assets
and interest accrued on liquidation in the facts and circumstances of the case.
5. To sum up, both the appeals of Revenue are dismissed.
Order pronounced in the open court on 26th July, 2021.
 

Please find attached the enclosed file for the full judgement