Business income - interest income and interest expesnes

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.