Interest

This query is : Resolved

RAHUL MALHOTRA (Querist)
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09 July 2013 Hello Sir,

I am struggling with one issue. One of my HUF client has taken OD limit against FD. Now in previous year he used that limit for two purposes i.e. First for personal purpose like payment of RD instalment, LIC etc. and another for lending money to his partnership firm, from where he get interest @ 14.4% p.a. against interest he paid on OD limit @ 12p.a. This issue arise three points:
1.FD Interest
2.OD Interest
3.Interest received from partnership firm.

As per me FD interest is totally taxable.
As regards to OD interest and income that he earned due to such expenditure should be net off as per sec 56(iii) as it was incurred exclusively for earning such income.

Please advice me and if possible make it detail.

Rupesh Jain

Rupesh Jain (Expert)
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09 July 2013 fd intt is taxable

and od intt part used for investment in partnership as capital

allowed as business exp.

intt. form partner ship firm also taxable in business income.

od part used for personal purpose not allowed

RAHUL MALHOTRA

RAHUL MALHOTRA (Querist)
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09 July 2013 Thanks for response. But assessee has not given that amt as capital but as outsider loan. HUF is not a partner in firm. HUF just given loan to partnership as an outsider and receives interest on it. I want to know can we net of both interest as he incurred interest exp to earn intt. income.