Allowability of Interest on loans
This query is : Resolved
10 December 2009
A takes a loan, for the purpose of investing in a company, to acquire controlling interest. The interest payable on such loan - is it allowable as an expenditure?? If so under which section??
12 December 2009
The income that you get from investment in shares of other company (to acquire controlling stake) is in the form of dividend. Dividend is tax free. Hence, any expense incurred to earn income which is tax free is disallowed. For details refer Section 14A of Income Tax Act.
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