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interest free loan

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(Querist)
21 July 2009 1. is it allowed in income tax to give interest free loan to non-relatives ??(which section to refer),

2. whether interest free loan can be considered as sum received with out consideration for section 56(2)(vi) where both the parties have shown the transaction in balance sheet and thus section 68 is not applicable??

thank you
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Aditya Maheshwari

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Aditya Maheshwari (Expert)
21 July 2009 1. Yes you can give interest free loan to non - relatives but it should not be from interest paid funds.

2. As per a recent judgement of the tribunal loan received without interest cannot be considered as sum received without consideration for the purpose of 56(2)(vi). Hence no problem there too.
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