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Interest on Capital

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(Querist)
05 May 2009 The profit and loss account of a businessman, running a sole proprietorship firm, is debited with interest on capital Rs.5000.Whether it will be allowed as a deduction under the head profits and gains from business or profession?
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
05 May 2009 No,because one person cannot pay interest to himself.
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Manmohan ACA, CS

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Manmohan ACA, CS (Expert)
06 May 2009 No
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taxindiaconnect

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taxindiaconnect (Expert)
06 May 2009 NO, Interst on capital is allowed only to partners of a firm in whoes hands this interest is taxable as business Income
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CA.Pujah

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CA.Pujah (Expert)
06 May 2009 No it's not allowable if it is paid to the proprietor himself. b'cos u can't pay intt to urself.
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Rajeev Garg

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Rajeev Garg (Expert)
06 May 2009 agreed
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