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2024 (5) TMI 541 - CALCUTTA HIGH COURTIncome recognition - Interest on NPA - non-recognition of income is not permissible under the Income-tax Act, 1961 and the same should be added to the total income of the assessee for the year - ITAT deleted addition - HELD THAT:- As decided in Income Tax Appellate Tribunal [2015 (11) TMI 926 - ITAT KOLKATA] irrespective of the method of accounting following by the assessee, interest, expenses of the nature referred to section 43B (d) of the Act can be allowed as a deduction only in the year in which such interest are actually paid. The debit to the profit and loss account of an amount which is claimed as deduction u/s 43B of the Act is not a requirement and the decision of Associated Pigments Ltd. [1998 (9) TMI 78 - CALCUTTA HIGH COURT]supports the plea of the assessee in this regard - Decided in favour of the assessee and against the revenue. Interest on non-performing asses - HELD THAT:- As decided in Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT] held that the assessee-company being NBFC is governed by the provisions of the RBI Act. In such a case, interest income cannot be said to have accrued to the assessee having regard to the provisions of section 45Q of the RBI Act and Prudential Norms issued by the RBI in exercise of its statutory powers. As per these norms, the ICD had become NPA and on such NPA where the interest was not received and possibility of recovery was almost nil, it could not be treated to have been accrued in favour of the assessee. Decided in favour of the assessee. Accrual of interest on recurring deposit - Year of assessment - HELD THAT:- Accrual of interest on recurring deposit / sinking fund was only upon maturity, it is also an admitted fact of the case that the entire accrued interest was accounted for by the assessee and was offered to tax in the assessment year 2005-06. Thus, the interest on such deposit/fund which was subjected to tax by the assessing officer in assessment year 2001-02 and assessment year 2002-03 was offered for taxation by the assessee in the assessment year 2005-06 and was accordingly taxed.Under the circumstances, the impugned order of the ITAT cannot be said to suffer from any manifest error of law. Decided in favour of assessee.
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