Section 43B : Interest Converted into Loan is not Treated as Paid

 CIT Vs. M.M. Aqua Technologies Ltd., I.T.A. No. 110/2005 , Date of Pronouncement: 18.05.2015, High Court of Delhi  

Whether the funding of the interest amount by way of a term loan amounts to actual payment as contemplated by Section 43B of the Income-tax Act, 1961?

Held No

Explanation 3C, having retrospective effect with effect from 01.04.1989, would be applicable to the present case, as it relates to AY 1996-97. Explanation 3C squarely covers the issue raised in this appeal, as it negates the assessee‟s contention that interest which has been converted into a loan is deemed to be „actually paid‟. In light of the insertion of this explanation, which, as mentioned earlier, was not present at the time the impugned order was passed, the assessee cannot claim deduction under Section 43B of the Act.