STATE BANK OF TRAVANCORE vs COMMISSIONER OF INCOME TAX, KERALA

The Supreme Court ruled that under Sections 28, 29, and 145 of the Income Tax Act, 1961, interest on 'sticky advances' must be treated as income accrued at the end of the accounting year, as the assessee bank followed the mercantile system of accounting. The Court held that the interest credited to the 'Interest Suspense Account' was taxable, as it was considered accrued income despite the improbability of recovery. Additionally, the Court affirmed that profits arising from the devaluation of the Indian Rupee were assessable to tax, rejecting the assessee's claims for exemption.