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Query on income tax disallowance

Others 354 views 2 replies

Dhana Sai

244 Points Posted on 08 October 2024

Suppose we have paid 1cr interest for the loan taken for carrying out business. And did not deduct tds under 194A. So, 30 lakhs is disallowed under section 40.

But if we have shown int paid of 70 lakh only in pl statement, remaining 30% is written of to capital account , even then we are liable to disallow 30% on 70 lakhs aa ir...or not required since he has claimed 70% only.

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9615 Points Posted on 08 October 2024

You're referring to a situation where: - Interest paid on a business loan is ₹1 crore - No TDS was deducted under Section 194A - ₹30 lakhs is disallowed under Section 40(a)(ia) - Only ₹70 lakhs is shown as interest paid in the Profit & Loss (P&L) statement - The remaining ₹30 lakhs is written off to the capital account In this case, you are still liable to disallow 30% on the ₹70 lakhs shown in the P&L statement, as per Section 40(a)(ia). The disallowance is calculated on the interest expense claimed in the P&L statement, which is ₹70 lakhs. Therefore, the disallowance would be ₹21 lakhs (30% of ₹70 lakhs). The fact that you have written off the remaining ₹30 lakhs to the capital account does not impact the disallowance calculation. Please note that this is a complex area of taxation, and it's always best to consult a tax professional or chartered accountant for personalized advice.