Interest to financial institutions were due but not paid so added back to income u/s 44. In the subsequent year the un paid interest waived by the institutions and taken as income in the books of accounts. Now, the question is whether the interest waived to be considred as income us/41(1) or it was already added to income in the previous years can we deduct from the income now.
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exemption u/s Sec 41(1)
Replies (2)
dear satya....
i m afraid the interest due but not paid is added back under Sec.43B not under sec.44...........
as per the second query..........the intial words of SEc.41(1) reads......
"Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee................"
since no deduction or allowance was made in the previous yr. in which the interest become due.....the case doesn't fall under Sec.41(1) at all.................
hence the interest was already subject to tax in the previous yr. in which it was disallowed........no addition in the subsequent yr. is required to be made.......because only that expense is deemed income u/s 41(1) which is allowed as deduction in any previoius yr.......whereas the int. was not allowed............
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