Deduction u/s 57

deduction u/s 24(b) only possible.

You have to claim deduction u/s 24 because there has to be one to one relation of Loan Interest paid to Loan interest received.

interest earned on capital as a partner in the firm is taxable as business income.

interest paid on housing loan comes under Income from House Property. if this income is loss due to interest on loan,

Loss from House Property can be deducted from Business Income for arriving total taxable Income

Hi Shreyas,

Please allow me to give some more clarity /light on the reply given in the response of your question with relevant provision of income tax law interpretation:

First of all would like to explian you about the taxability of interest received you have received from the firm.

Section 28 is the relevant section which talks about the taxability of interest received from firm, accordingly any interest, salary , remuneration or any amount whatever name called taxable under the head profit, gains from business and profession.

Hence from above this is confirm that in your case , the interest you have recieved would be considered PGBP income and taxable under the head of PGBP not under the head of income from the other sources.

DEDUCTIBILITY OF EXPENSES U/s 57

Now comes to on the other part of question you have asked for , whether interest paid on home loan would be deductible against the interest you have earned from the investment in firm.

There are two most prior condition to claim deduction u/s 57 , these are as follows:

1. Section 57 talks about some specfic deduction and  the ONLY /MOST FIRST CONDITION  TO CLAIM such deduction is that its deductible only against the income taxable under the head of other  sources.

In your case we have already analyse that interest received from firm not a income which is taxable under the head of other sources so no question of deductibilty of interest paid on loan arises also.

2. Section 57 allowed other than deduction which is not specified in the section but CONDITION expenses incurred must be for earning the such income.

In our case there is also not a case , interest paid on home loan not to earn for intrerest from firm. So there would be no question of deductibility arises.

CONCLUSION:

Hence from above analysis you can conclude that law itself much clear about the items to be deductible through  section 57 , so case law not required here.

Furhter as per facts provided,  you are eligible to claim deduction u/s 24 up to 1,50,000 assuming all condition satisfied and in case you do not have any income from house property deduction of Rs.150,000/- would be considered as loss from house property.

And losses from house property allowable to set off off against income under the head of PGBP.

So in your case ultimately you would get the deduction of interest paid on loan against the interest income received from the firm.

 

Hope able to sort out your all question with support of relevant provision of law.

Thanks

 

 

Actually I have Interest Income under other Sources also as Interest from FD and Others.

The point is that I am paying interest on Home Loan which is more than 1.5L, so, just wanted to know weather I can claim this excess interest paid against Interest Income received.

But, I guess it is not possible.

No he can claim standard deduction u/s 24(b) only.

DeDUCTION u/s 24(b),No such set off is allowed in your case as such...

Need to be a direct relation between the expenditure incurred and the income earned for availing dedution u/s 57. It should be explicit and not implicit cost. The loan has been availed specifically to buy house property and not for investing in the firm. In other ways too, not withdrawkng the funds for financing your house and rather taking a loan makes it an implicit expenditure. Hence deduction shall be taked u/s 24(a) and not u/s 57.

Sorry for the wrong section. It shall be sec 24(b) instead.

Sorry for the wrong section. It shall be sec 24(b) instead.