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”. The AO was of the opinion that for AY 1996-97 the amount claimed as processing charges was in fact interest, and liable to be treated as suc...