Sett off losses

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2012 In the F.Y. 2010 - 11 I have below mentioned income.

1. Salary of Rs.8,00,000
2. Business Income of Rs. 75,000
3. Interest Income of Rs. 45,000
4. Interest Expeneses of Rs.4,00,000
(On unsecured loan)

I wants to know that whether interest expenses incurred by me was set off against business income and salary income in this particulars A.Y. OR I need to carry forward it under the head of Income from other source.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 March 2012 THE PURPOSE OF AVAILING UNSECURED LOAN, HERE, DOES NOT SEEM TO BE FOR THE PURPOSE OF BUSINESS. IN THE ABSENCE OF ANY CLEAR INFORMATION IN THIS REGARD , IT CAN BE SAID
THAT THE MAXIMUM SET OFF AVAILABLE WILL BE TO THE EXTENT OF INTEREST INCOME I.E. RS. 45000/-
ONLY.
.

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2012 I agreed that maximum set off available is the F.Y.2010-11 is Rs.45,000 in above case. My next question is can i carry forward the balance of Rs.3,55,000 as other loss in my return of income to be set off against other income in next financial year.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 March 2012 As you have agreed that interest can not be claimed as the same is not related with business purpose, you could have asked whether the same can be capitalsied or not had it been related with any capital expenditure.

However, the reply to your query related to carry fd., in the present context, is -No. It can't be carried forwarded as it's not a loss.

Why I said it's not a loss, because it could not be earmarked with the business activity or can be said as not an item of allowable expenditure.

Querist : Anonymous

Querist : Anonymous (Querist)

06 March 2012 If in the above case unsecured loan taken by individual is used for the purpose of propritorship business. Further unsecured loan was shown in the peronal balancesheet of proprietor. What will be the remady if it is shown under prorietorship business balancesheet.