Income from loan given-urgent

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Anil Sankar V

1474 Points Posted on 25 November 2012

Dear sir & madams,

Client-NRI

My client who resided in abroad gives money in large amount to his customers in india at 18%p.a,

AS the business of client is increasing,he has taken loan from Banks in india @ 9%p.a to earn income from lending loans.Is the amount payable to banks in india deductible from the head income from other sources?

Pl. provide the solution with proper explantaion and do consider recent case laws.

-for history

Replies (2)

Giridhar S Karandikar

Team Lead

5675 Points Posted on 25 November 2012

As per teh facts given by you, the client si carrying on the business of taking & lending money.

The client is taking money from banks and lending it to his customers. The bank is charging interest to your client & client in turn is earning income from his customers by wasy of interest by lending the amount to them taken from the bank.

Hence the interest paid by the client to the bank shall be wholly & exclusively allowed as business expense as it is incurred in course of his business & hence can't be shown as income from other sources.