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
CAclubindia
