ca final dt pm pg 8.19 (question no. 9) (Open)
Suraj 20 October 2016
can any body give sol to this que. Thanks in advance
Mr x borrowed 5 lacs for investment in domestic and foreign co. he gets7500 and 12500 as dividend from domestic and foreign co respectively. he claims of interest on loan as expense deductible from dividend. is Mr x correct in his view.
hi
as u know that dividend received from indian company is exempt from tax under section 10(34) of income tax act, only condition is that the indian company has paid dividend distribution tax on it. so this income is exempt in ur hand and you need not deduct interest on loan from this income, as the income is exempt, the interest also not deductible.
but the dividend received from foreign company is taxable in ur hand and u can deduct interest on loan from this income ( but as per my personal opinion- u can deduct interest on that part, which u can invest in foreign company for investment only)- u can not claim deduction of interest on that amount, which u invest in indian company.
so ,as per section 57, u can claim it as expenses proportionate basis
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