Z Ltd., a running concern, received interest on the loans/advances made by it to its debtors. It contended that such interest was to be treated as business income. Is the contention of Z ltd., correct, if such interest was not on account of delayed payment towards sales or compensation/damages or an item relatable to its business.
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Income Tax Query III
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If loans/advances are made in the ordinary course of business then only interest will be treated as Income from Business else income from other sources...
the given interest should be treated as business income for sure
it shud related to B&P head.
All interest incomes must be taxed under the head IOS irrespective of its nature.
However, it can be argued that the interest is in the nature of business income if advances are made in the ordinary course of business.
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