Case Law Details
Teesta Agro Industries Ltd. Vs. DCIT (ITAT Kolkata)
It is not in dispute that the unpaid interest has been converted/rescheduled into fresh loan. The assessee had only made a claim u/s 43B of the Act as deduction passed on constructive payment of interest to the bank and constructive receipt thereon from the bank as loan. But we find that the provisions of Explanation 3C to section 43B of the Act are against the assessee which reads as under:-
“[ Explanation 3C- For the removal of doubts, it is hereby declared that a deduction of any sum, being interest payable under clause (d) of this section, shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan or borrowing shall not be deemed to have been actually paid.”
From a perusal of the aforesaid provision it is very clear that the unpaid interest which got converted into loan cannot be claimed as deduction u/s 43B of the Act.
FULL TEXT OF THE ITAT JUDGMENT
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