On revenue’s appeal, the Tribunal, relying on RBI guidelines and various rulings, held that interest on NPAs is to be recognised on actual receipt basis but not on accrual basis. Hence, overdue interest in respect of interest accrued on NPAs, which had not been received, could not be recognised as income. (AY.2008 -09)
ACIT v. The Guntur Co-operative Central Bank (2018) 193 TTJ 870 / 166 DTR 280 (Visakha.) (Trib.)
S. 143(3) : Assessment- Overdue interest-Provisions for bad and doubtful debts – Schedule bank – Interest income on NPAs is taxable on receipt basis and not on accrual basis. [S.4,28(i), 36, 37 (1)]