AS PER SECTION 36(1)iii OF INCOME TAX ACT 1962 INTEREST ON LOAN IS ALLOWED IF SUCH LOAN IS USED FOR BUSINESS AND PROFESSION SUBJECT TO CERTAIN CONDITIONS.BUT IF LOAN USED FOR BUSINESS AND PROFESSION IS REPAID EARLY THEN WHETHER PREPAYMENT INTEREST CHARGED BY THE BANK IS ALLOWED UNDER THIS SECTION? AND IF NOT THEN IS IT ALLOWED UNDER ANY OTHER SECTION OF INCOME TAX?
It will be allowed under Sec 37(1).
Please refer
ITAT Kolkata
Sarat Chatterjee & Co. (VSP) (P.) Ltd.
v/s
Assistant Commissioner of Income-tax
IT Appeal NOs. 1531 & 1544 (KOL.) of 2010
ultimate result was allowance of prepayment penalties and interest.
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