Penal interest on bank overdraft

Akram (C.A.FINAL) (136 Points)

09 August 2013  

One of our clients is availing the Bank Overdraft facility with bank amounting Rs. 25lacs, however on several occassions during the year the client has withdwrawn in excess of Rs. 25lacs and the bank has charged the Penal Interest on the overdrawn amount.


Now my query is whether the Penal Interest (charged on overdrawn amount) is disallowed under the Income Tax.