Payment can be considered as interest only when it is in respect of pre-existing debt obligation

 Brief of the case: The Hon’ble Kerala HC in the case of Beacon Projects Private Limited held that a sum paid can be termed as interest only when the same is paid in respect of a pre-existing debt obligation and there existed a debtor-creditor relationship. Facts of the case: The assessee company is a builder which had entered into construction agreements with various customers. The agreement provides for construction of a flat by the assessee for and on behalf of the purchaser. Payments are to be made by the purchaser in instalments as specified in the agreement. After entering into t...