income tax set off of loss against interest income

711 views 3 replies

Rajesh Poddar

Chartered Accountant

321 Points Posted on 16 June 2011

07/06/2011

Dear Friends,

A Company has received interest income of Rs. 17 Lakhs on loans given to other companies.

Further there used to be Rental income in earlier years. Now the property is lying vacant for the whole of F.Y.

The company has paid Rs. 5 Lakhs towards property taxes, 2 Lakhs towards security charges, office expenses Rs. 7 lakhs like salaries to staff, telephone etc.

My query is that can the compuation be done like ( Rs. 17 Lakhs - 5 Lakhs - 2 Lakhs - 7 Lakhs) = Rs.3 Lakhs Net Profit.

Is the above mode of computation right, in other words can i claim the above expenses. if yes please reply with supporting case laws etc !

Your expert views shall be highly appreciated.

Thanks

CA Rajesh Poddar

Replies (3)

U S Sharma

glidor@gmail.com

21068 Points Posted on 16 June 2011

Originally posted by : Rajesh Poddar

07/06/2011

Dear Friends,

A Company has received interest income of Rs. 17 Lakhs on loans given to other companies.

Further there used to be Rental income in earlier years. Now the property is lying vacant for the whole of F.Y.

The company has paid Rs. 5 Lakhs towards property taxes, 2 Lakhs towards security charges, office expenses Rs. 7 lakhs like salaries to staff, telephone etc.

My query is that can the compuation be done like ( Rs. 17 Lakhs - 5 Lakhs - 2 Lakhs - 7 Lakhs) = Rs.3 Lakhs Net Profit.

- 7 Lacs salary, telephone without any business ? are you sure?

Is the above mode of computation right, in other words can i claim the above expenses. if yes please reply with supporting case laws etc !

Your expert views shall be highly appreciated.

Thanks

CA Rajesh Poddar

Arvind Sharma

ACA

1432 Points Posted on 16 June 2011

Expenses being 2 Lakhs towards security charges, office expenses Rs. 7 lakhs like salaries to staff, telephone etc. will not be eligible to claim against Income House Property Head. However, if the main business of assessee is of advancing loan, then the same can be claimed against Interest Income

For Computation find attached file :-

CA AMANPREET SINGH

Chartered Accountant

284 Points Posted on 16 June 2011

it is totally dependent on Nature of property. as it is being given on rent it should be charged under head House Property. Thus expenses related to property cannot be deducted for computing Business income.

In case property is being rented for the purpose of main business , then it can be adjusted against business income.