Factoring charges cannot be termed as interest u/s 2(28A) of Income Tax Act

Siva Industries and Holdings Ltd. Vs DCIT (ITAT Chennai)

ITAT Chennai held that factoring charges could not be termed as Interest under section 2(28A) of Income Tax Act, 1961. Accordingly, disallowance of the same u/s 40(a)(ia) unsustainable.

Facts-

The assessee claimed factoring charges of Rs.782.68 Lacs in the Profit & Loss Account. It transpired that the assessee took unsecured loan from its holding company M/s Siva Ventures Ltd.

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