Pgbp
This query is : Resolved
SAHETA OCHANI
(Querist)
02 November 2012
2. A person has taken four loans for buying four cars. All the four cars are used for business purpose. So the interest paid should be allowed as an expense under PGBP. Assume the total loan taken amounts to Rs 10L and interest free loans and advance are given amounting to Rs 30L.
But the AO is of the opinion that interest paid on loan should be disallowed proportionately because it is incorrect to take loan and claim expense as it reduces tax liability. Instead of giving this amount as interest free to family members it can be used to purchase cars
But if the nexus is proved that the amount of loan taken is purely used for purchasing cars for business purpose then why is the AO taking any objection. Because it is a proprietory concern and the proprietor and the concern are considered as one entity in the eyes of law. So it depends on the proprietor where and how he wants to use his business money...HOW SHOULD THE ASSESSEE DEAL WITH THE ABOVE SAYING OF THE AO..IS THERE ANY RELEVANT CASE LAW THAT CAN PROVE THE NEXUS..???PLEASE HELP...
But the AO is of the opinion that interest paid on loan should be disallowed proportionately because it is incorrect to take loan and claim expense as it reduces tax liability. Instead of giving this amount as interest free to family members it can be used to purchase cars
But if the nexus is proved that the amount of loan taken is purely used for purchasing cars for business purpose then why is the AO taking any objection. Because it is a proprietory concern and the proprietor and the concern are considered as one entity in the eyes of law. So it depends on the proprietor where and how he wants to use his business money...HOW SHOULD THE ASSESSEE DEAL WITH THE ABOVE SAYING OF THE AO..IS THERE ANY RELEVANT CASE LAW THAT CAN PROVE THE NEXUS..???PLEASE HELP...
Soumitra Basu
(Expert)
04 November 2012
YOU HAVE TO PROOF THAT THE INTEREST FREE LOAN WAS PAID OUT OF OWN FUND AND THERE IS NO LINK OF RECEIPT OF LOAN AND PAYMENT OF LOAN.
Message likes :
1 times
SAHETA OCHANI
(Querist)
05 November 2012
fine..thank you..:)
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Accounting treatment of AMC alongwith the purchase of Laptop
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Taxation of crypto futures in India Fy 2026- 2027
- Transfer of Physical Stock Between Two Proprietorship Concerns
- Not ordinarily resident having partnership income in India and salary in USA is any form to filed be
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Issuing of delivery challan by seller of goods
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
