DIT v. Brahamputra Capital Financial Services Ltd. (2011) 335 ITR 182 (Delhi)
Fact : NBFC gave interest bearing loans to group concern. It has not recognised the interest/discount etc. as per the NBFC Prudential Norms (RBI) Directions, 1998 because those group concern became NPA as per the said norms and even the recovery of principal amount was doubtful.
Decision : The interest on the NPA, whose recovery was doubtful, was not accounted for in the books and the assessee is bound by the RBI Guidelines for such treatment. THERE WAS NO REAL ACCRUAL OF INTEREST INCOME IN THE HANDS OF THE ASSESSEE and, hence, it would not be chargeable to tax under Section 5.
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