Penal interest allowance

RAJKUMAR D (Articled Assitant) (26 Points)

14 August 2017  

Dear Sir/Madam

                       One of the Private Limited Company who brought 10crores for its business expenditure as a overdraft facility provided by one of registered commercial bank. In between the repayment of loan the company has default for two days for which bank was charged the penal interest. Whether this penal interest is allowable by IT department or not? If it's so kindly provide which nature and section.