Method of accounting in the case of interest on sticky advances – Change from mercantile to cash – Change by some State financial corporations – Whether to be allowed
Circular : No. 491 [F.No. 201/60/867-IT(A-II)], dated 30-6-1987.
1. The Supreme Court has in its judgment in the case of State Bank of Travancore v. CIT  158 ITR 102 held that the interest accruing on sticky loans is taxable to income-tax on accrual basis where the assessee follows the mercantile system of accounting.