The ITAT ruled that interest accrued on Non-Performing Assets...

The ITAT ruled that interest accrued on Non-Performing Assets (NPAs) cannot be added to taxable income when not credited to the Profit and Loss account. The Tribunal noted that the assessee maintained books in compliance with RBI norms, which require interest on NPAs to be recognized only upon receipt. Despite the AO and CIT(A)'s contention that income tax law does not exempt such accrued interest, the ITAT held that Section 43D of the Income Tax Act cannot override RBI Act provisions. The Tribunal set aside the CIT(A)'s order, directed deletion of the addition of accrued interest on NPAs, and ordered recomputation of the assessee's income.

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