Interest on loan or depositer
This query is : Resolved
31 December 2013
Sir,
I want to know how much interest rate is allowable in income tax act for f.y 10-11.I have proprietory business and We paid Interest to loans taken from relatives and interest paid 18% p.a on loan amount.We also deduct tds 10% from Interest and paid via chalan and also filed our tds return.Our Depositer also files his personal return.And also mentioned interest income in his return and also paid selfassessment tax on his personal income.So i want to know that the assessing officer disallow the interest rate 18%.Kindly any judjement in this matter as per your knowledge please give reference.
I want to know how much interest rate is allowable in income tax act for f.y 10-11.I have proprietory business and We paid Interest to loans taken from relatives and interest paid 18% p.a on loan amount.We also deduct tds 10% from Interest and paid via chalan and also filed our tds return.Our Depositer also files his personal return.And also mentioned interest income in his return and also paid selfassessment tax on his personal income.So i want to know that the assessing officer disallow the interest rate 18%.Kindly any judjement in this matter as per your knowledge please give reference.
31 December 2013
Actual int paid or payable for the year is allowed.
31 December 2013
see excessive interest paid to related party can be disallowed under 40A(2)(b).
However, to disallow, the AO needs to establish that the said interest was excessive.
There are cases where 18% to 24% interest has been held as reasonable. please refer ACIT Vs.Raj Steel Industries, in ITA No.2245/Ahd/2010 and in the case of Vipul Y. Mehta Vs. ACIT, ITA No.869/Ahd/2010.
you can also refer Indus Technical Education ... vs Department Of Income Tax on 28 June, 2013 (ITA Nos.296 and 297/LKW/2011)
Sunder Forging, Ludhiana vs Department Of Income Tax on 18 December, 2012 ITA No. 968/Chd/2012
However, to disallow, the AO needs to establish that the said interest was excessive.
There are cases where 18% to 24% interest has been held as reasonable. please refer ACIT Vs.Raj Steel Industries, in ITA No.2245/Ahd/2010 and in the case of Vipul Y. Mehta Vs. ACIT, ITA No.869/Ahd/2010.
you can also refer Indus Technical Education ... vs Department Of Income Tax on 28 June, 2013 (ITA Nos.296 and 297/LKW/2011)
Sunder Forging, Ludhiana vs Department Of Income Tax on 18 December, 2012 ITA No. 968/Chd/2012
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31 December 2013
Thankyou Verymuch Sir,
For your most valuable and very helpful answer to us.
Thanks again.
For your most valuable and very helpful answer to us.
Thanks again.
31 December 2013
You are welcome jay
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