Section 43D of the Income Tax Act

Income-tax Act, 2025: s.56

Section 43D of the Income-tax Act, 1961 corresponds to section 56 (Special provision in case of interest income of specified financial institutions) of the Income-tax Act, 2025.

Read section 56 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 43D is CIT v. Vasisth Chay Vyapar Ltd. (330 ITR 440), cited in 125 of the 155 judgments on BharatTax that turn on this section.

Leading authorities on Section 43D

CIT v. Vasisth Chay Vyapar Ltd.
330 ITR 440 · 2011 · High Court
125
citing judgments

Interest income is taxable under the mercantile system of accounting even if it is not actually recovered, provided there is a right to receive it. The decision also touches upon the treatment of bad debts and provisions for doubtful debts under Section 36(1)(viia).

CIT v. Vasisth Chay Vyapar Ltd.
410 ITR 244 · 2019 · Supreme Court
63
citing judgments
Bank of Rajasthan Ltd. v. Commissioner of Income Tax
2024 SCC OnLine SC 2877 · 2024 · Reported
21
citing judgments

Banks can claim tax deductions for broken period interest on Held to Maturity (HTM) government securities if classified as stock-in-trade, treating it as revenue expenditure, not capital expenditure.

American Express Bank Ltd. v. Addl. CIT
25 Taxmann.com 572 · 2012 · Reported
15
citing judgments

Unpaid interest on loans where principal/interest remained unpaid for 90 days, classified as non-accrual loans, when reversed to a Reserve for Doubtful Interest (RFDI) account, and subsequent interest accruals credited to RFDI instead of the profit and loss account, is taxable on a net basis of accruals less recoveries.

DIT v. American Express Bank Ltd.
235 Taxmann 85 · 2015 · High Court
11
citing judgments
M/S Novozymes South Asia Put Ltd. v. ACIT
168 ITD 529 · 2018 · ITAT
10
citing judgments

The ITAT Mumbai in M/S Novozymes South Asia Put Ltd. v. ACIT (2018) has allowed employee stock option plans (ESOPs) as a deduction, recognizing them as an effective tool for employee reward and retention.

Kerala Road Transport Corporation v. ITO
34 TTJ 101 · ITAT
9
citing judgments
(2) CIT Vs Vasisth Chay Vyapar Ltd, 330 ITR 440 (Delhi), 2011 (3) DIT v. Brahmaputra Capital Financial Services Ltd.
335 ITR 182 · 2011 · High Court
7
citing judgments
Karnavati Co-op. Bank Ltd. v. DCIT
134 ITD 486 · 2012 · ITAT
4
citing judgments

Judgments on Section 43D

DCIT, Circle - 6(1), Kolkata vs. M/S. Gajraj Commercial Pvt. Ltd., Kolkata

In the result, appeal of the revenue is dismissed

ITA 782/KOL/2018[2014-15]Status: DisposedITAT Kolkata26 Apr 2019AY 2014-15

Bench: Sri J. Sudhakar Reddy & Sri S.S. Godara] I.T.A. No. 782/Kol/2018 Assessment Year: 2014-15 Deputy Commissioner Of Income Tax, Circle-6(1), Kolkata.......................…..…..........Appellant Vs. M/S. Gajraj Commercial Pvt. Ltd.…………………………....……………………………………...Respondent 37A, Bentinck Street Room No. 314 Kolkata – 700 001 [Pan : Aadcg 2577 J] Appearances By: Shri Ravi Tulsiyan, Fca, Appeared On Behalf Of The Assessee. Dr. P.K. Srihari, Fca, Appearing On Behalf Of The Revenue. Date Of Concluding The Hearing : March 18Th, 2019 Date Of Pronouncing The Order : April 26Th, 2019 O R D E R Per J. Sudhakar Reddy, Am :- This Appeal Filed By The Revenue Is Directed Against The Order Of The Learned Commissioner Of Income Tax (Appeals) - 7, Kolkata, (Ld. Cit(A)) Passed U/S. 250 Of The Income Tax Act, 1961, (The ‘Act’), Dt. 30/01/2018, For The Assessment Year 2014-15. 2. After Hearing Rival Contentions, We Find That The Assessee Is A Non-Banking Financial Corporation (Nbfc) & It Has No Recognised Interest Income From Non- Performing Asset (Npa). The Assessing Officer Calculated Notional Interest @ 12% On The Said Amount Of Rs. 60,76,61,152/- & Added As Income Interest Of Rs.7,29,19,338/- On The Ground That The Same Has Accrued To The Assessee. He Referred To Section 43D Of The Act & Held That As A Nbfc Does Not Fall Within The Purview Of Section 43D Of The Act. He Held That The Interest Income On Sticky Loans Have To Be Recognised On Accrual Basis. On Appeal, The Ld. First Appellate Authority Applied The Real Income Theory & Deleted The Addition. 3. Aggrieved, The Revenue Is In Appeal Before Us.

Section 250Section 43D

Pr. Commissioner of Income Tax-2, Jalandhar vs. M/S. the Jalandhar Central Co-Op. Bank Ltd

Accordingly, the present appeal is also dismissed in terms of

ITA/487/2018HC Punjab & Haryana27 Mar 2019
Section 143(3)Section 260ASection 43DSection 45HSection 45Q

Deputy Commissioner of Income Tax, Pune vs. M/S. Pune Cantonment Sahakari Bank Ltd, Pune

In the result, both the appeals of Revenue are dismissed

ITA 435/PUN/2017[2007-08]Status: DisposedITAT Pune27 Mar 2019AY 2007-08

Bench: Shri Anil Chaturvedi, Am & Shri Partha Sarathi Chaudhury, Jm

For Appellant: Shri Dhiraj DandgavelFor Respondent: Shri Abhijit Haldar
Section 145Section 148Section 154Section 36(1)(viia)Section 43D

The Thaliparamba Co-Op Urbank Bank Ltd, Taliparamaba vs. The Pr.CIT, Kozhikkode

In the result, the appeal filed by the assessee is allowed

ITA 35/COCH/2018[2013-14]Status: DisposedITAT Cochin13 Mar 2019AY 2013-14

Bench: S/Shri Chandra Poojari, Am & George George K., Jm

Section 143(3)Section 263Section 43D

DCIT, Rohtak vs. M/S the Jhajjar Central Co-Op Bank Ltd., Jhajjar

In the result, the appeal of the Revenue is dismissed

ITA 26/DEL/2016[2010-11]Status: DisposedITAT Delhi01 Feb 2019AY 2010-11

Bench: Shri Before Shri G.D. Agrawal, Before Shri Before Shri G.D. Agrawal, G.D. Agrawal, Vice G.D. Agrawal, Vice & And & Shri Amit Shukla Shri Amit Shuklashri Amit Shukla Shri Amit Shukla

For Appellant: Shri Amit Katoch, Senior DRFor Respondent: Shri S.K. Bansal, CA
Section 43D

DCIT, Rohtak vs. M/S the Rohtak Central Co-Op Bank Ltd., Rohtak

In the result, the appeal of the Revenue is dismissed

ITA 25/DEL/2016[2012-13]Status: DisposedITAT Delhi01 Feb 2019AY 2012-13

Bench: Shri G.D. Agrawal, Before Shri G.D. Agrawal, Vice & And Before Shri Before Shri G.D. Agrawal, G.D. Agrawal, Vice & And Shri Amit Shukla Shri Amit Shuklashri Amit Shukla Shri Amit Shukla

For Appellant: Shri Amit Katoch, Senior DRFor Respondent: Shri S.K. Bansal, CA
Section 43D

Deputy Commissioner of Income Tax vs. M/S. Vidya Sahakari Bank Ltd, Pune

In the result, appeal of the Revenue is dismissed

ITA 182/PUN/2017[2013-14]Status: DisposedITAT Pune23 Jan 2019AY 2013-14

Bench: Shri R.S. Syal, Vp & Shri Partha Sarathi Chaudhury, Jm

For Appellant: NoneFor Respondent: Shri Pankaj Garg
Section 43D

The Mehsana Urban Coop Bank Ltd vs. The Assistant Commissioner of Income Tax, Circle Mehsana

SCA/14458/2018HC Gujarat08 Jan 2019
Section 143(3)Section 148Section 43D

The Pr. Commissioner of Income Tax-3, Ludhiana vs. M/S the Ludhiana Central Co-Operative Bank Ltd

Accordingly, the present appeal is also dismissed

ITA/200/2018HC Punjab & Haryana08 Oct 2018
Section 143(3)Section 145Section 147Section 260ASection 40Section 43D

Saunak Mitra, Kolkata vs. ACIT, Cir-25, Kolkata

In the result, the appeal filed by the assessee is partly allowed

ITA 1252/KOL/2017[2009-10]Status: DisposedITAT Kolkata08 Oct 2018AY 2009-10

Bench: Shri S. S. Godara, Jm & Dr. A.L. Saini, Am Saunak Mitra Vs. Acit, Circle-25, Kolkata 39, Mahanirban Road, Ground Floor, Aayakar Bhawan, 2, Kolkata – 700 029. Gariahat Road South, Kolkata – 700 068. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Ahspm 6241 J (अपीलाथ" /Appellant) (""यथ" / Respondent) ..

For Appellant: Shri K. M. Roy, FCAFor Respondent: Shri A. Bhattacharjee, Addl. CIT
Section 143(1)Section 143(2)Section 143(3)Section 194CSection 40

DCIT - 1(3)(2), Mumbai vs. Agrasen Urban Co.Op.Bank Ltd., Pune

In the result, the appeal by the Revenue stands dismissed

ITA 2874/MUM/2016[2010-11]Status: DisposedITAT Mumbai03 Oct 2018AY 2010-11

Bench: Shri Shamim Yahya, Am & Shri Sandeep Gosain, Jm

For Appellant: Shri Suhas Bora
Section 119Section 143(3)Section 145Section 45Q

DCIT 1(3)(2), Mumbai vs. Mumbai District Central Co-Op Bank Ltd, Mumbai

In the result, appeal of the assessee is treated as allowed for statistical purposes

ITA 6540/MUM/2016[2011-12]Status: DisposedITAT Mumbai26 Sept 2018AY 2011-12

Bench: Shri G.S. Pannu & Shri Ram Lal Negi: A.Y : 2011-12

For Appellant: Shri Ajay SinghFor Respondent: Shri Chaitanya Anjaria
Section 143(3)Section 43D

Mumbai District Central Co Op Bank Ltd, Mumbai vs. DCIT 1(3), Mumbai

In the result, appeal of the assessee is treated as allowed for statistical purposes

ITA 6538/MUM/2016[2011-12]Status: DisposedITAT Mumbai26 Sept 2018AY 2011-12

Bench: Shri G.S. Pannu & Shri Ram Lal Negi: A.Y : 2011-12

For Appellant: Shri Ajay SinghFor Respondent: Shri Chaitanya Anjaria
Section 143(3)Section 43D

The Pr Commissioner of Income Tax -3 Ludhiana vs. The Ludhiana Central Co- Op Bank Ltd Near Sadar Police Station Civil Lines Ludhiana

The appeals are dismissed

ITA/349/2017HC Punjab & Haryana24 Sept 2018
Section 260ASection 43DSection 45HSection 45Q

Assistant Commissioner of Income Tax vs. M/S. the Deola Merchant Co-Operative Bank Ltd, Nashik

In the result, appeal of the Revenue is dismissed

ITA 2992/PUN/2016[2013-14]Status: DisposedITAT Pune19 Sept 2018AY 2013-14

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर अपील अपील संसंसंसं. / Ita No.2992/Pun/2016 आयकर आयकर आयकर अपील अपील िनधा"रण वष" वष" / Assessment Year : 2013-14 िनधा"रण िनधा"रण िनधा"रण वष" वष"

For Appellant: Shri Sudhendu DasFor Respondent: Shri Abhay Avchat
Section 36(1)(viia)Section 43D

The Royal Bank of Scotland N.V., Kolkata vs. DCIT, ( International Taxation) Cir-2(1), Kolkata

In the result, the appeals of the assessee are partly allowed for statistical purposes

ITA 36/KOL/2017[2012-13]Status: DisposedITAT Kolkata14 Sept 2018AY 2012-13

Bench: Hon’Ble Shri S.S.Godara, Jm & Shri M.Balaganesh, Am ] I.T.A Nos. 36 & 1885/Kol/2017 Assessment Year : 2012-13 & 2013-14 M/S Royal Bank Of Scotland N.V. -Vs- Dcit (It), Circle-2(1), Kolkata [Pan: Aacca 6818 K] (Appellant) (Respondent)

For Appellant: Shri R. N. Bajoria, ARFor Respondent: Shri G. Mallikarjuna, CIT DR
Section 144C(13)Section 43D

The Royal Bank of Scotland N.V., Kolkata vs. DCIT, ( International Taxation) Cir-2(1), Kolkata

In the result, the appeals of the assessee are partly allowed for statistical purposes

ITA 1885/KOL/2017[2013-14]Status: DisposedITAT Kolkata14 Sept 2018AY 2013-14

Bench: Hon’Ble Shri S.S.Godara, Jm & Shri M.Balaganesh, Am ] I.T.A Nos. 36 & 1885/Kol/2017 Assessment Year : 2012-13 & 2013-14 M/S Royal Bank Of Scotland N.V. -Vs- Dcit (It), Circle-2(1), Kolkata [Pan: Aacca 6818 K] (Appellant) (Respondent)

For Appellant: Shri R. N. Bajoria, ARFor Respondent: Shri G. Mallikarjuna, CIT DR
Section 144C(13)Section 43D

The Royal Bank of Scotland N.V., Kolkata vs. DCIT, (It) - 2(1), Kolkata

Accordingly, the Ground Nos. (iv) to (vi) raised by the revenue are dismissed

ITA 505/KOL/2016[2011-2012]Status: DisposedITAT Kolkata05 Sept 2018AY 2011-2012

Bench: Hon’Ble Shri Aby. T. Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A No. 503/Kol/2016 Assessment Year : 2011-12 Dcit (It), Circle-2(1), Kolkata -Vs- M/S Royal Bank Of Scotland N.V. [Pan: Aacca 6818 K] (Appellant) (Respondent) I.T.A No. 505/Kol/2016 Assessment Year : 2011-12 M/S Royal Bank Of Scotland N.V. -Vs- Dcit (It), Circle-2(1), Kolkata [Pan: Aacca 6818 K] (Appellant) (Respondent)

For Appellant: Shri R. N. Bajoria, ARFor Respondent: Shri G. Mallikarjuna, CIT DR
Section 144C(13)Section 144C(5)Section 43D

DCIT, Cir-2(1), Kolkata vs. M/S Royal Bank of Scotland N.V., Kolkata

Accordingly, the Ground Nos. (iv) to (vi) raised by the revenue are dismissed

ITA 503/KOL/2016[2012-2013]Status: DisposedITAT Kolkata05 Sept 2018AY 2012-2013

Bench: Hon’Ble Shri Aby. T. Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A No. 503/Kol/2016 Assessment Year : 2011-12 Dcit (It), Circle-2(1), Kolkata -Vs- M/S Royal Bank Of Scotland N.V. [Pan: Aacca 6818 K] (Appellant) (Respondent) I.T.A No. 505/Kol/2016 Assessment Year : 2011-12 M/S Royal Bank Of Scotland N.V. -Vs- Dcit (It), Circle-2(1), Kolkata [Pan: Aacca 6818 K] (Appellant) (Respondent)

For Appellant: Shri R. N. Bajoria, ARFor Respondent: Shri G. Mallikarjuna, CIT DR
Section 144C(13)Section 144C(5)Section 43D

Assistant Commissioner of Income-Tax vs. The Laxmi Co-Op. Bank Ltd

In the result, the appeal of Revenue is dismissed

ITA 1238/PUN/2016[2012-13]Status: DisposedITAT Pune17 Aug 2018AY 2012-13

Bench: Ms. Sushma Chowla, Jm & Shri Anil Chaturvedi, Am आयकर अपीऱ सं. / Ita No.1238/Pun/2016 यििाारण वषा / Assessment Year : 2012-13 The Asst. Commissioner Of Income Tax, अऩीऱाथी/Appellant Circle-2, Solapur …. Vs. The Laxmi Co-Operative Bank Ltd., 319, South Kasba, …. प्रत्यथी / Respondent Solapur Pan: Aaaat3138G

For Appellant: Shri Ashok BabuFor Respondent: Shri S.N. Doshi
Section 143(3)Section 43DSection 5