IT : Interest on bad debts - Interest on bad and doubtful debts kept in reserve account would be eligible for deduction under section 43D
 25 taxmann.com 572 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'L'
American Express Bank Ltd.
Additional Commissioner of Income-tax, Spl. Range-32, Mumbai*
R.S. SYAL, ACCOUNTANT MEMBER
AND I.P. BANSAL, JUDICIAL MEMBER
IT APPEAL NO. 5374 (MUM.) OF 2001
INT. T.A. NO. 97 (MUM.) OF 2001
[ASSESSMENT YEAR 1998-99]
AUGUST 10, 2012
Section 43D of the Income-tax Act, 1961 - Public Financial institution/public companies - Assessment year 1998-99 - Whether mere crediting of interest to a reserve cannot be said to be an incidence by which said interest could be charged to tax - Held, yes - Whether where interest on loans granted by assessee-bank remained unpaid which were classified as non-accrual loans and were reversed to an account called Reserve for Doubtful Interest account, assessee would be entitled to claim deduction under section 43D in respect of said interest and simply on ground that interest had been credited on such type of debts in reserve account, deduction could not be taken away - Held, yes [Para 15] [In favour of assessee]
Section 5 of the Interest-tax Act, 1974 read with section 43D of the Income-tax Act, 1961 - Chargeable interest - Assessment year 1998-99 - Whether interest on non-performing assets would be charged to interest-tax only in year in which said interest is credited to profit and loss account or in year of receipt, whichever is earlier - Held, yes [Para 17] [In favour of assessee]