Interest allowable u/s 57

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This query is : Resolved

BHAVESH SHAH (Querist)

12 November 2014 The Assessee earns income from interest (offered for tax under IFOS). He claims interest expese u/s 57. The A. O. proposes to disallow the interest expense. He argues that the interest was not spent to earn the income.

Can the assessee ask for transferring both the interests (income & expense) u/s 37 ? He has no other business. Banking is not his business as such.

Please advise.

Nikhil Kaushik

Nikhil Kaushik (Expert)

12 November 2014 transferring to business income is fraught with its own risk as you are not a bank/NBFC.

and AO is most probably right in disallowing the interest expense.

Amol S Joglekar

Amol S Joglekar (Expert)

12 November 2014 That is not the plea. The expenses incurred to earn the income can be deducted. Can you please tell me your views as to how you feel that interest is paid to earn the income?

Nikhil Kaushik

Nikhil Kaushik (Expert)

12 November 2014 transferring to business income is fraught with its own risk as you are not a bank/NBFC.

and AO is most probably right in disallowing the interest expense.

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