|
36. Determination of finance charges
|
|
|
36. Determination of finance charges.—(1) The amount of finance charges referred to in clause (b) of sub-section (1) of section 34 shall be—
(a) the amount of interest paid on any capital borrowed or debt incurred ;
(b) the amount of interest paid to trade creditors ;
(c) the amount of interest paid to any participant, which is in accordance with the agreement of formation of unincorporated body and relates to the period falling after the date of such agreement, limited to the extent as may be prescribed ;
(d) the amount of any incidental financial charges ;
(e) the proportionate amount of discount or premium payable on any bond or debenture issued by the person, calculated in the manner as may be prescribed.
(2) The amount of finance charges referred to in sub-section (1) shall not include—
(a) any amount paid in respect of capital borrowed or debt incurred for acquisition of a capital asset (whether capitalised in the books of account or not) for any period—
(i) in the case of a new business, prior to the date of commencement of such business ; and
(ii) in any other case, prior to the date on which such asset was first put to use ;
(b) any amount of incidental financial charges for issue of convertible debentures or bonds or share capital ; and
(c) any amount of interest referred to in section 23 of Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).
(3) The amount of interest on any capital borrowed or debt incurred, which is payable to any financial institution, shall be allowed as a deduction, notwithstanding anything in sub-section (1), in the financial year in which the amount is actually paid or in the financial year in which the liability has accrued, whichever is later.
(4) Any interest referred to in sub-section (3) which has been converted into a loan or borrowing shall not be deemed to have been actually paid for the purposes of that sub-section.
(5) In this section, "capital borrowed" shall include recurring subscriptions received periodically from shareholders, or subscribers, in a mutual benefit finance company, which fulfils such conditions as may be prescribed.
Clause 36 provides that the amount of finance charges for the purposes of clause 34 shall be—
(a) the amount of interest paid on any capital borrowed or debt incurred ;
(b) the amount of interest paid to trade creditors ;
(c) the amount of interest paid to any participant to the extent prescribed which is in accordance with the agreement of formation of unincorporated body and relates to the period falling after the date of such agreement ;
(d) the amount of any incidental financial charges ;
(e) the proportionate amount of discount or premium payable on any bond or debenture issued by the person, calculated in the manner as may be prescribed.
Sub-clause (2) of clause 36, inter alia, provides that the amount of finance charges shall not include any amount paid in respect of capital borrowed or debt incurred for acquisition of a capital asset, incidental financial charges for issue of convertible debentures, bonds or share capital and any amount of interest referred to in section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
Sub-clause (3) of the said clause provides that the amount of interest on any capital borrowed or debt incurred, which is payable to any financial institution, shall be allowed as a deduction in the financial year in which the amount is actually paid or in the financial year in which the liability has accrued, whichever is later.
Sub-clause (4) of the said clause provides that any interest referred to in sub-clause (3) which has been converted into a loan or borrowing shall not be deemed to have been actually paid for the purposes of that sub-clause.
Sub-clause (5) of the said clause provides that, "capital borrowed" shall include recurring subscriptions received periodically from shareholders, or subscribers, in a mutual benefit finance company, which fulfils such conditions as may be prescribed.
|
|
|
Case Look ups