Interest expenses

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2013 Dear Experts,

My client is Managing Director in Listed company and drawing salary. now he is having interest income on loan given to same company and he is also paying Interest on loan taken by him.

Client getting Interest income with net of TDS and he is not deducting TDS on Interest paid by him.

Please suggest that in which head we have to show Interest Income and can client claim interest expenses ?

Please advise.
Regards
Vijay Jain

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 September 2013 Dear Vijay,

1. Normally 194A doesn't apply to individuals unless 44AB is applicable. So please check whether the director is liable for tax audit or not.

2. The interest income received can be shown in other incomes.

3. interest paid is a normal finance expense.

However, why a circular transaction is being done may raise questions in tax scrutiny.
Kindly check the applicable

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