UN SECURED LOAN FROM FRIEND

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This query is : Resolved

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A client received a £250,000 loan from a friend via self-cheque for business use. They repaid the loan and two months' interest through their bank account. The query is how to account for this transaction, especially since the initial loan was by self-cheque, and whether the interest can be treated as a business expense. Guidance is sought on the correct treatment of this unsecured loan from a friend.

raghavendra b

raghavendra b (Querist)
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06 February 2022 DEAR SIR,

ONE OF MY CLIENT RECEIVED RS 250000/- LOAN FROM HIS FRIEND BY SELF CHEQUE DATED 16.6.2020 FOR HIS BUSINESS PURPOSES. NOW HE HAD PAID TWO MONTH INTEREST FOR THE LOAN RATE OF INTEREST @ 2% RS 10000/- AND HE HAS PAID HIS LOAN AMOUNT RS 250000/- IN THE MONTH OF 20.8. 2020 THROUGH HIS BANK ACCOUNT. SO MY QUERY IS HOW TO TREAT THIS TRANSACTION IS BUSINESS PURPOSE BECAUSE HE HAS GIVEN BY SELF CHEQUE NOW HE HAS PAID BY HIS BANK ACCOUNT CAN I TREAT AS A UNSECURED LOAN FROM FRIENDS AND DEBIT INTEREST AS BUSINESS EXPENSES OR ANY OTHER SOLUTION FOR THIS TRANSACTION PLEASE GUIDE ME.

YOUR SUGGESTION MUCH NEEDED AND APPRECIABLE

REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 February 2022 As per Section 269SS, any deposit or loan or any specific amount should not be accepted or taken from any person other than by an account payee bank draft, account payee cheque, or through electronic clearing system via bank account.
In view of the above it can't be shown in books of accounts.

raghavendra b

raghavendra b (Querist)
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06 February 2022 THANK YOU SIR,

BUT HE HAS PAID RS 250000/- BY CHEQUE TRASACTION IS ENTERED IN THE BANK ACCOUNT SO WHAT TO DO HOW TO TREAT THIS PERSON.

REGARDS

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