section 14A of I.T.Act.
This query is : Resolved
CA Sanjay Baheti
(Querist)
01 September 2010
A proprietorship firm has 900 lac capital and has invested in partnership firms 450 lacs and has raised unsecured loans of 200 lacs. The interest paid on unsecured loans is claimed as expenditure against trading profit on sale/purchase of land.The investment in partnership firms of 450 lacs , the profit share is claimed as exempt. The A.O. is insisting to disallow interest on unsecured loans u/s 14A.Is he correct when sufficient capital is there.
Aditya Maheshwari
(Expert)
01 September 2010
See the investment made by the company in the firm is a interest bearing asset and no exempt income is generated by virtue of being invested in the firm as u are getting interest on capital.
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