18 February 2015
Sir, A person has taken loan on FDr on which he is paying interest. and on the same hand he is also receiving interest on the FD. so can he adjust the interest received on fdr from the interest paid on loan from FDr. I have read the judgement of Kerela High court "CIT v. Dr. V. P. Gopinathan — 229 ITR 801 (Ker.) : but I am not able to understand it correctly. kindly guide me.
18 February 2015
Supreme Court [248 ITR 449] also upheld the decision of the Kerala high court.
The fact of the case in nut shell is as follows.
The assessee had fixed deposits in a nationalized bank on which he earned interest. At the same time he took loan from the same bank by pledging the said FD. While filing the IT return, interest paid on loan is deducted from the interest earned on FD and the net interest only is offered for taxation. Such set off was not allowed since the interest paid is not for the purpose of earning interest income.
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