Allowability of Loan Processing Charges
HEMENDRA TAILOR (SR. MANAGER) (32 Points)
11 September 2009HEMENDRA TAILOR (SR. MANAGER) (32 Points)
11 September 2009
Krutesh Patel
(ACA)
(727 Points)
Replied 11 September 2009
Processing charges paid on purchase of assets will be capitalised
Rajeev
(www.rkmco.com)
(985 Points)
Replied 20 September 2009
It should be remembered that processing charges are not paid for the asset , its paid for the sanction of the loan for acquiring the asset . I think the bank charges processing fees before the sanction of the loan in mega cases . what if the loan is not sanctioned ?
I think its a revenue expense cos of inclusion in defintion u/s sec 2(28A)
AS 16 advises that borrowing costs have to be capitalised .so it becomes a lil dicey .
I couldnt locate any case law relating to this . If anyone finds any proper solution pls let me know , Thanks