Taxability of term deposit interest for an agricultural co.
This query is : Resolved
23 February 2013
HI,
AN AGRICULTURAL CO. HAS INVESTED IN SECURITIES- TERM DEPOSIT ON ITS NAME AND IS RECEIVING INTEREST ON THE SAME. THE CO. HAS ALSO TAKEN LOAN AGAINST THE SAID DEPOSITS AND IS ALSO PAYING ON THE SAME.
WHAT WILL BE THE TAXABILITY OF THE ABOVE SITUATION? WHETHER INTEREST RECEIVED WILL BE TAXABLE OR WHETHER INTEREST PAID CAN BE SET OFF AGAINST THE INTEREST RECEIVED?
AN AGRICULTURAL CO. HAS INVESTED IN SECURITIES- TERM DEPOSIT ON ITS NAME AND IS RECEIVING INTEREST ON THE SAME. THE CO. HAS ALSO TAKEN LOAN AGAINST THE SAID DEPOSITS AND IS ALSO PAYING ON THE SAME.
WHAT WILL BE THE TAXABILITY OF THE ABOVE SITUATION? WHETHER INTEREST RECEIVED WILL BE TAXABLE OR WHETHER INTEREST PAID CAN BE SET OFF AGAINST THE INTEREST RECEIVED?
24 February 2013
Yes. Interest received is taxable. To be agriculture income both basic & additional activity needs to be carried. Interest Income is not an agriculture income hence fully taxable. Further interest paid is for the purpose of eraning interest hence will be allowed as deduction.
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