Allowing the appeal, that both the Commissioner (Appeals) and the Tribunal had found, as a matter of fact, that under the rehabilitation plan agreed to between the lender and the borrower, the debentures were accepted by the financial institution in discharge of the debt on account of outstanding interest. The issue of debentures by the assessee was, under a rehabilitation plan, to extinguish the liability of interest altogether. In the assessment of the bank, for the assessment year in question, the accounts of the bank reflected the amount received by way of debentures as its business income. It was clear that interest was “actually paid” by means of issuance of debentures, which extinguished the liability to pay interest. No misuse of the provisions of section 43B was found as a matter of fact by either the Commissioner (Appeals) or the Tribunal. Explanation 3C, which was meant to plug a loophole, could not therefore be invoked on the facts of this case. The High Court was in error in concluding that “interest”, on the facts of this case, had been converted into a loan. The interest was deductible. Court also held that retrospective provision for the removal of  doubts cannot be presumed to be retrospective if  it alters or changes law as it stood and Ambiguity in language to be  resolved in favour of assessee.    (AY. 1996-97)