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CA Vishal kapoor (Querist)

10 December 2010 HI,
My question is that our firm sold the Fixed asset(Car) in FY 2009-10 & booked the profit in the books in the computation of that FY.The Asset is sold to on of our relatives with mutual understanding that our firm will pay the monthly installments on that asset.The asset is financed from the bank.We receive the full and final payment of the asset.
Kindly suggest me whether we can claim the Interest expenditure in our books even though we sale the asset.

Thanks & regards
Vishal

sachin

sachin (Expert)

11 December 2010 Interest exp can be claimed u/s 36(i)(iii) of income tax act, 1961. Int exp should be in relation to business of the organisation.

Since you had sold the asset, then that asset is not a property of the firm. so u cannot claim int exp for the said FY.

CA Vishal kapoor

CA Vishal kapoor (Querist)

11 December 2010 Dear Sachin Sir,
In my view we can claim the Interest expenditure, because the person who purchase the asset from us in cash sale for him & he is not eligible to claim the Interest expenditure because he didnt pay any interest on that asset. We receive the payment from him & out of that proceeds we pay the installments.

Correct me if i am wrong..

Thanks Sir

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