Interest income on NPA need not to be accrued in books of account in case of Bank and NBFCs

Brief of the Case ITAT Ahmedabad held In the case of West Bengal Infrastructure Development Finance Corporation vs. ACIT that in the case of CIT vs Vasisth Chayt Vyapar Ltd. 330 ITR 440 (Delhi) , it was held that the real income theory was still relevant and recognition of income in terms of Prudential Norms of RBI did not deviate from the mercantile system of account u/s 145 of the Income Tax Act. We are of the view that in the instant case due to uncertainty in collection there was no accrual of income having regard to the real income theory which is engrained in the RBI’s prudential n...