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Business income - interest income and interest expesnes

ITR Filing 188 views 1 replies

Sridhar

Executive

40 Points Posted on 18 July 2018

An assessee doing finance business under individual license,

Earning only interest income (4,00,000) and

Interest expenses:

1. Interest on loans from banks paid (40,000),

2. Interest on loans from relatives payable added to respective loans (3,00,000).

Is interest expenses allowed as deduction?

If yes, under what section? and

where it can be shown in ITR3?

Thanks,

Replies (1)

CA Sunil Kumar

Chartered Accountant

4524 Points Posted on 18 July 2018

Interest Income is either assessed as 'Business Income' or as 'Income from other sources' depending upon the activities carried on by the assessee. If the investment yielding interest is part of the business of the assessee, the same would be assessable as 'business income'
In this case, interest income will be assessed as business income. Interest expenses are allowed under section 37 of IT act. If you have maintained Books of account then fill ITR 3 with Balance sheet and profit and loss account. Otherwise select option ' BOA not maintained' and fill only required details.