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43B DISALLOWANCE INT ON LOAN

CA VIJAYAKUMAR S (a) (107 Points)

27 August 2010

WHAT IF THE LOAN INTEREST IS CAPITALISED WITH A ASSET ??

(INTEREST ACCRUED BUT NOT PAID BUT CAPITALISED WITH THE ASSET)

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2 Replies

CA Harbinder (CA ) (1245 Points)
Replied 27 August 2010

IN THIS CASE THE ACCOUNTS DOESN'T SHOW THE TRUE AND FAIR VIEW AND THE ACCORDINGLY THE AUDITOR'S REPORT SHOULD BE A 'QUALIFIED REPORT'.

vipul maheshwari (CA FINAL ) (44 Points)
Replied 22 September 2010

if interest is capitalised or converted into fresh loan . it will be allowed under section 43B in the previous year in which converted interest will be actually paid .Lets take an example

suppose loan amount is Rs 10,000,00/- and interest amount is Rs 1,00,000/-if u convert the interest amount into loan then loan amount will be Rs 11,00,000/- it will not allowed in the year of conversion .

But will be allowed when you will pay Rs 1,00,000/- out of Rs 11,00,000/- Circular No. 7/2006 ,dated July 17,2006.