Mr. A got few loan form friends and relatives and interest on them. He invested the money in property and some business. Form property he ralized the capital gain and from business the profit. Now the questiion is whether the interest paid on loan took in persoanl capicity be claimed as expenditure and how ?
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I Tax problem
Replies (5)
He cannot claim anything towards capital gain.
He can claim the interested paid on the amount that was used for his business, provided he is a sole proprietor.
TDS provisions attracts subject to tax audit.
Interest paid would be allowed in case of business only and not on capital gain. Also the assessee has to prove that the loan was taken for business purpose and not personal purpose.
It does not matter that you take a loan from relatives or FI. Loan for business purpose can be taken from any person.
Only a Sole proprietor can take a loan in his personal account for business purpose, other assesses cannot do so.
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jital2003 @ yahoo.co.in
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