Hello Sir,
I am struggling with one issue. One of my HUF client has taken OD limit against FD. Now in previous year he used that limit for two purposes i.e. First for personal purpose like payment of RD instalment, LIC etc. and another for lending money to his partnership firm, from where he get interest @ 14.4% p.a. against interest he paid on OD limit @ 12p.a. This issue arise three points:
1.FD Interest
2.OD Interest
3.Interest received from partnership firm.
As per me FD interest is totally taxable. As regards to OD interest and income that he earned due to such expenditure should be net off as per sec 56(iii) as it was incurred exclusively for earning such income. Please advice me and if possible make it detail.
Rahul
09810267888
CAclubindia
