Finance charges could not be treated as interest within the meaning of Interest Tax Act, 1974

Issue before Court:

Whether ITAT was right in not treating the processing or finance charges as interest income under the definition provided under section 2 of Interest Tax Act.

Brief facts:

• Assessee was carrying on financial business which included accepting deposits as a mutual benefit fund company. It also used to lend money and, for that purpose, charged from its borrowers certain amounts under different heads which included “financing charges”.

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