Prepayment charges and processing fee are allowable under section 24(b) as Interest from Income under head “Income from House property”[Peepul Tree Properties Mum Trib]

Definition of Interest u/s 2(28A) includes any service fee or other charge in respect of moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized.

Hence both the prepayment charges and processing fee are allowable under section 24(b) as Interest from Income under head “Income from House property”

ITAT Mumbai followed :

1. Pentagram Properties Pvt. Ltd. DCIT (ITA No.3713/M/2010) dated 12th August 2011
2. Windermere Properties (P) Ltd. DCIT (34 taxmann.com)
3. CIT Gujarat Guardian Ltd. (177 Taxman 434, Delhi)

Peepul Tree Properties (P.) Ltd. [2016] 71 taxmann.com 332 (Mumbai – Trib.) MAY  20, 2016