Section 43 B

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This query is : Resolved

CA.Madhu (Querist)

16 December 2008 As per Sectin 43 B of the income tax act, any interest on the loan from any bank or from any financial institution is disallowed unless if it is not paid befoe the due date for filing of return as per sec 139(1). is the overdraft is treated as loan? if it is considered as like any interest is credited with assessee's a/c but not paid before the due date, is this interest is allowed, please specify case laws if any?

Ravikumar.G

Ravikumar.G (Expert)

16 December 2008 Clause (e) of section 43 B dealing with
payment of interest on any loan or advances obtained from a scheduled bank was inserted by the Finance (No.2) Act, 1996 effective from the assessment year 1997-98. Originally it covered “term loan” but the Finance Act, 2003 enlarged the coverage by use of expression “loans or advances”. Now it covers wide gamut of bank finance availed by assessees such as term loans, cash credits, over drafts etc.

CA.Madhu

CA.Madhu (Querist)

16 December 2008 the amount credited by the bank to the account itself but not paid by assessee actually is treated as paid or not?

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)

16 December 2008 There should be credit transaction after the interest have been debited and the credit amount should be more than interest amount.

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)

17 December 2008 In case the outstanding as on last day of the year is within the Drawing Power Limits of the loan then it is presumed that the interest debited has already been recovered.

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