Bhind District Co-Operative Central Bank Ltd. v Income-Tax Department (2019) 177 DTR 196/309 CTR 316/ (2020)429 ITR 121 (MP) (HC)

S. 43D : Public financial institutions -Accrual of income — Non-Banking financial company —Interest on non-performing assets — Cannot be assessed on accrual basis . [ S. 36(1) (vii), 36(1)(viia) ]

Allowing the appeal of the assessee the Court held that , since the assessee was acting under the directives of the Reserve Bank of India with regard to prudential norms set out, taxing interest on non-performing assets could not be justified on the real income theory. The Tribunal was not justified in holding that interest on non-performing assets was taxable on accrual basis.( AY.2009-10)

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