Dismissing the appeal of the revenue the Court held that ,even though the special provision in S. 43D for taxing interest income on NPAs on receipt basis does not apply to NBFCs, it does not mean that NBFCs have to offer interest on bad or doubtful debts to tax on accrual basis. Such interest is not taxable on the real income theory. ( ITA No. 237 of 2017, dt. 02.04.2019) ( AY.2009 -10)
PCIT v. Bajaj Finance Ltd( 2019) 178 DTR 219/ 309 CTR 28. (Bom.)(HC), www.itatonline.org
S. 43D : Public financial institutions–Method of accounting-Accurval of income–Real income theory-Interest on NPAs-Even though the special provision in S. 43D for taxing interest income on NPAs on receipt basis does not apply to NBFCs, it does not mean that NBFCs have to offer interest on bad or doubtful debts to tax on accrual basis. Such interest is not taxable on the real income theory. [S. 145]