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Deduction of interest expenditure

This query is : Resolved 
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Querist : Anonymous

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Querist : Anonymous (Querist)
05 November 2014 A Pvt. Ltd. Co. deals in shares i.e.dealing in shares contitutes
its business. It makes investments in Mutual fund, debentures etc.
It also gives loan to other parties. During the F.Y. 2013-14, it
obtained a loan @ 24% p.a. For obtaining loan, it gave professional fees
to another company who processed the loan and made arrangements
to give us loan from Lender.

The company after obtaining the loan gave a part of loan to
another person on which no interest is charged i.e. loan given is interest free.
Part of loan is given to a party from whom we are charging interest.
Some part of loan is used in making FDR with banks.

Query is:

Whether the professional fees paid for obtaining the loan will be
allowed as deduction or same will be added in computing income
under Head " Business or Profession".
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
05 November 2014 AO often disallow part of the interest on/fee paid for obtaining interest bearing loans when they are utilized for giving interest free loans.

so you can expect partial disallowance..
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
05 November 2014 AO often disallow part of the interest on/fee paid for obtaining interest bearing loans when they are utilized for giving interest free loans.

so you can expect partial disallowance..
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