Dear members,
An assesse has earned interest income of rs. 80000 which is chargeable under the head IOS.
Now, the same Assessee has incurred Interest expenses of rs. 60000. can he claim expense of Rs. 60000 u/s 57 or any othersections.
In a nutshell, how can he claim deduction of such amount. Or should the interest income be shown directly as 20000 only.
Thank You.
If the assessee is an individual, he can claim deduction of interest charges in case of home loans, but the income earned as interest shall be fully taxable unless 80TTA applies wherein he can claim 10K deduction.
In view of Supreme Court’s decision in CIT v. Dr. V.P. Gopinathan [2001] 248 ITR 449, such set-off is not allowed.
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Hence, the assessee is to be assessed on the gross amount of interest received by him.
but in my view, expenses incurred in relation to taxable income is fully allowed.
Yes, agreed. Interest paid is deductible only if it is incurred for earning a taxable income u/s 57(iii).
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Actually in the original query it was mentioned that the assessee has incurred interest expense and the querist was asking its allowability. By simple reading, I couldn’t make out whether it is incurred for earning a taxable income or otherwise. Hence, I presumed the later one and answered accordingly. Rest has been said by you.
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Thank you everyone. This solves y queries.
Rahul Dang & Associates-Chartered Accountants
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