Mr. X wants to start a Sole Proprietary business of Electronics (DVD Players), for that he approaches the bank for a loan and the bank asks for a Project Report. He has zero capital from his own pocket. He takes a loan in his own name and introduces the same into his business, whether the Interest paid on such loan will be an allowable expense while computing his business income?
Secondly, Can he start the business by showing in the Balance Sheet the loan as secured loan and capital as Nil (As he he has no money of his own.)
Regards,
Devendra Kulkarni
CAclubindia
