Interest Paid on Loan Taken by Father

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Hello dear members.., its been a long time since i've referred INCOME TAX... So, cannot judge this situation and need ur help... Suppose X takes a loan in his nmae from bank or some official loan or unofficial loan, but interest on such loan is paid by Y, his son. Because X's own business is not working well and he's not able to pay interest.................... Now, my question is, whether such interest is deductible from Y's income?? As loan is not in his name, but he just pays the interest on it...... And if interest is deductible, then what about the principal amount, if that too is paid by Y???? Please, its a humble request, dont give possible answers, if u r sure, then only reply..., because possiblities confuse me a lot nd generate further questions.... Thanx a ton......

Replies (1)

First you have to acertain the loan amount is used for business of Y or not?

If the principle of Loan was not being used by Y for his business, then no question of deduction.

If the Loan amount was used for Y's business, then deduction can be claimed.

It means y's father take a loan and then give to his son. Now 269SS will apply, whether father given the amount by cheque or not? However there is some case laws for non applicability of 269SS in case of family transaction.


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