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2011 (9) TMI 101 - HC - Income TaxInterest - Loan taken for business or to engage in money landing business - According to the Assessing Officer, "loans were not given for the sake of business transactions but simply the loans taken were transferred to the parties by way of loan and the assessee acted as conduit of such loan transactions" - Held that:- There is no prohibition of taking loan for running a money lending business and an assessee is lawfully entitled to deduct the interest paid on such loan as business expenditure as provided in the Act. - It is not the law that money lending business must be run out of one’s own money without taking loan from others or that interest paid on loan for running such business is not allowable as business expenditure - the various transactions of granting and taking loan by the assessee not having been disbelieved and being supported by the profit and loss account of the previous years, the assessment of which had attained finality, the Assessing Officer illegally refused to allow the amount of interest paid by the assessee for various loans taken by him for running the businesses for the relevant assessment year. AO directed to allow entire amount of interest paid by the assessee to his creditors as business expenditure and to treat the amount of interest received by the assessee from his debtors as his income from money lending business subject to the provisions of Section 14A.
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