I cannot see your interrupt handler. Can you post your complete project, so that we all can have a look at all of your settings? To do so, use
Creator->File->Create Workspace Bundle (minimal)
and attach the resulting file.
and better set your isr from "level" to "rising edge".
When you get the handler called, do not forget to clear the interrupt in your timer by reading the status.
I ended up using an existing timer example and porting my code and design to it. Still not sure why my original design did not work with interrupts. I did everything from Cypress examples and documentation.
Could you please create the tech support case in cypress.com website and attach the complete project, so it will help us to debug the project?