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1 - 10 of 20 (0.32 seconds)C.B. Gautam vs Union Of India & Ors on 17 November, 1992
Next issue is that whether a Circular having effect of
relaxing rigour of law can be treated as inconsistent with
the provisions of a statute. In order to aid proper
determination of the income of money lenders and banks,
the Central Board of Direct Taxes has issued a Circular
dated October 6, 1952, providing that where interest
accruing on doubtful debts is credited to a suspense
account, it need not be included in assessee's taxable
income, provided the Income tax Officer is satisfied that
recovery is practically improbable. The CBDT u/s.119 of
the I.T.Act has power to issue Circulars in exercise of its
statutory powers. If the Board consider it necessary to lay
down certain Rules and then direct the sub-ordinate
authorities, such directions are required to be followed
and such Circular would be binding on the Department
unless and until held as ultra vires by a court of law.
The Board has powers to relax the severity or the
strictness of law and the authorities are required to
follow those instructions as held in the case of C.B.
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Gautam vs. Union of India 108 CTR 304 (SC) & 110 CTR
179 (SC); Navnitlal C.Zaveri 56 ITR 198(SC) and
K.P.Varghese 131 ITR 597 (SC).
Uco Bank, Calcutta vs Commissioner Of Income-Tax, West ... on 13 May, 1999
In the said decision of the
Tribunal, viz. Jt.CIT v/s. India Equipment leasing Ltd.
(2008)111 ITD 37 (Chennai), the Respected Co-ordinate
Bench has expressed that quote " Prior to insertion of
section 43D with effect from 1-4-1991, recognition of
income was on the basis of circular of 9-101984. It said
that for first three years the income may be taken on
accrual basis and from 4th year onwards, the income in
respect of doubtful debts was to be recognized on receipt
basis. Since the income was to be assessed for first three
years on accrual basis, provisions of
section 43D were inserted in the Act. Circular No.621,
dated 19-12-1991 gives the legislative intention stating
that section 43D was inserted with a view to improving
the viability of banks, public financial institutions etc., so
as to provide that interest on sticky loans shall be
charged to tax only in the year in which the interest is
actually received or credited to the profit and loss
account. This benefit was extended with effect from 1-4-
State Bank Of Travancore vs Commissioner Of Income Tax, Kerala on 8 January, 1986
However, in the past an interesting turn had taken place
by an order of the Hon'ble Kerala High Court in the case
of State Bank of Travancore reported in 110 ITR 336
(Ker.), wherein it was held that the assessee, a banking
company, did not credit in its account the interest that
had accrued on "sticky advances" because the assessee
felt that the interest could not to be realised. It credited
the interest to a separate account known as "interest
suspense account". On reference, the Hon'ble Court has
held that there was an accrual of income liable to
income-tax and the assessee was not justified in not
crediting the interest income on such "stick advances" it
its accounts. However, later on at the Hon'ble Apex Court
while pronouncing the judgment of the said State Bank
of Travancore vs. CIT reported in (1986)158 ITR 102(SC),
there were Hon'ble three Judges presiding the Court, out
of which Hon'ble two Judges were in the opinion that the
interest on "sticky advances" was rightly treated as
income which had accrued to the appellant. There was a
descending note by one of the Hon'ble Judge and
commented that whether an income on receipt basis or
on accrual basis, it is the real income and not any
hypothetical income which may have theoretically
accrued, i.e. subject to tax under the Act.
Keshavji Ravji & Co. Etc. Etc vs Commissioner Of Income Tax on 5 February, 1990
We have reproduced verbatim the provisions of section
43-D of the I.T.Act and expressed an opinion that if the
statute has used the terminology for the chargeability of
interest on the basis when "credited" or "actually
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received", then in our opinion no ambiguity has been left
by the Statute. If the statute is so clear that an
interpretation can easily be made, then that exact
meaning should be given to the language of the Section.
For this legal proposition we place reliance on Keshavji
Ravji and Company vs. CIT 183 ITR 01 (SC), wherein it
was held as under:
Commissioner Of Income-Tax vs Bank Of America Nt And Sa on 12 March, 2003
We can therefore safely draw a conclusion that by the
insertion of a special provision to tax interest income in
the case of public financial institution, etc. section 43-D
has to be applied in its letter and spirit. It is pertinent to
mention that later on, in the case of CIT vs. Bank of
America S.A. 262 ITR 504 (Bom) the question of interest
on "sticky loans" was decided in favour of the assessee
and held that the question is to be answered in favour of
the assessee following the decision of UCO Bank reported
at 237 ITR 889(SC) :: 240 ITR 355 (SC).
Dy.Commr.Of Income Tax vs State Bank Of India & Ors on 3 December, 2008
Likewise, in an
another case of CIT vs. State Bank of India 262 ITR 662
(Bom.)
M/S. Southern Technologies Ltd vs Joint Commnr. Of Income Tax, Coimbatore on 11 January, 2010
There is one more decision of the Hon'ble Apex Court
which is yet to be mentioned while discussing the
arguments raised from the side of the Revenue. A
decision in the case of Southern Technologies Ltd. vs. Jt.
CIT 320 ITR 577 (SC) has been cited but the fundamental
difference is that the issue before the Hon'ble Court was
in respect of provision for NPA and debited to P&L
Account by a NBFC. The said provision was undisputedly
made by the said NBFC as per the prudential norms
made by the Reserve Bank. Therefore we want to make it
clear that the question for consideration before the
Hon'ble Court was that if a provision for doubtful debt is
made then what will be the legal position of the
applicability of Explanation to section 36(1)(vii) of the I.T.
Act. For the sake of ready reference, relevant paragraph
from the held portion is reproduced below:
Commissioner Of Income-Tax vs Elgi Finance Ltd on 14 March, 2006
Now at present the situation is that the Hon'ble Madras
High Court in the case of CIT vs. Elgi Finance Ltd. 293
ITR 357 (Mad.) has taken a view that the assessee is a
company engaged in the business of lease, finance and
hire purchase and that the principle of accrual comes
into play without income was recognized and that the
assessee had classified its assets on the basis of
notification issued by R.B.I. and found that certain
assets came under the category of NPA and that from
such NPA the assessee had not recognized any income in
consonance with the notification issued by RBI and AS-9
issued by ICAI and that the assessee was justified in not
recognizing such income. The Court had further
expressed that there was no occasion to consider whether
the principle of accrual would arise or not, nevertheless,
the interest from such NPA would be taxed in the
appropriate assessment year on the basis of actual
receipt.
The Jt. Commissioner Of Income Tax, ... vs India Equipment Leasing Ltd. on 10 March, 2006
It is worth to mention that for this decision, the
Hon'ble Madras High Court has relied upon an another
decision of the same High Court pronounced in the case
of Jt.CIT vs. India Equipment Leasing Ltd. 293 ITR 350."