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of Section 43D is a non-obstante and special provision regarding income by way of interest on bad or doubtful debts. It states that such interest income shall be chargeable to tax in the previous year in which it is credited to the profit and loss account or actually received, whichever is earlier. The assessee bank appropriated and recognized interest income of Rs. 1,20,87,000/- on 13/05/2015 (A.Y. 2016-17) and 31/03/2017 (A.Y. 2017-18) from recovery of NPAs after prolonged litigation. The ITAT held that the word 'credited' in Section 43D should be understood in the context of recognition and appropriation as per RBI guidelines and the Indian Contract Act, 1872. Since the assessee appropriately recognized the interest income in the relevant assessment years after clearing litigation clouds, the provisions of Section 43D were complied with. Accordingly, the CIT(A)'s order was set aside, and the assessee's appeal was allowed.
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