Issue under sec 194c

Dear Members,

I (Company) Borrow money from "X" person." X "person Borrow the money from Bank.

Options:  1)  I(company) paying the interest amount to bank on behalf of "X" person. Can company claim that Interest as a expenditure in company books of accounts.

option 2) Company paying interest to" X" person by deducting the TDS under sec 194Aand X person remitting the interest amount due by him to bank.

Que: 1under the option one can a company claim that interest as a expediture in companys books bcz loan is not directly taking from bank,but interest is paying to the bank onbehalf of party.

Que 2) Is there are any alternatives to escape the sec 194A.

Suggesions i expect from members.

 

 

Replies (2)

In case of both the options the benefit of deduction of expenditure in the books of accounts can be taken

In this case in both the option exemption are available and the 1st option is always better to avoid sec. 194A

 

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