Interest expenses u/s 36(1)

One of my Assessee who is having a jewellary shop from last four decades. Last year they had a big robbery in their shop. Major of their ornaments were taken away. To keep their business running the assessee borrowed ornaments of his wife & mother to the tune of Rs. 50.00 lacs. Melted the ornaments & used the gold in his business. The said amount is shown as Deposit / Loan from mother & wife. This year onwards he wants to pay interest to his wife & mother. Will the said interest be allowed as expenditure.
Replies (2)

Yes. Interest to the extent of market rate (normally 12%) will be allowed as it is for business purpose.

Yes interest will be treated as expenditure. and deductible....

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