PCIT-2 Vs Central Bank of India (Supreme Court of India)
The matter arose from an appeal filed by the Revenue before the Bombay High Court for Assessment Year 2008-09. The Revenue proposed two substantial questions of law: (i) whether the Income Tax Appellate Tribunal (ITAT) was correct in holding that two separate provisions for rural and non-rural advances are permissible under Section 36(1)(viia) for the purpose of set-off of bad debts under Section 36(1)(vii) of the Income-tax Act, 1961; and (ii) whether the ITAT was correct in holding that interest income on securities accrues on the due date of payment of interest and not on a day-to-day basis, particularly when the assessee claims broken period interest as expenditure.
Read HC Judgment in this case: Bombay HC Rejects Revenue Appeal Because Interest on Securities Accrues Only on Due Date
On the first issue, the High Court noted that the ITAT had relied upon decisions of its Coordinate Benches in the assessee’s own case for earlier assessment years, namely 1989-90 to 1992-93, 1994-95, and 1999-2000. The Court had adjourned the matter to enable the Revenue to clarify whether appeals had been filed and admitted against those earlier Tribunal decisions. However, nothing on record indicated that any appeals had been filed. In light of this, the High Court held that no substantial question of law arose. The Court also recorded that the Tribunal had followed the decision of the Supreme Court in Catholic Syrian Bank Ltd. v. Commissioner of Income-tax.
