INTEREST RECOVERABLE EXCEEDING THE LOAN AMOUNT, Income Tax

[S.C. WADHWA]

A Pvt Ltd. gave loan to another Company around eight years back.

The rate of interest claimed is around 13% Such another company deducted TDS every year on interest payable

In books of Pvt. Ltd. Company, the amount of interest recoverable has exceeded the amount of original loan as the another company has not made any payment since the date of receiving loan neither towards principal nor towards interest.

Please advise whether it would cause any problem for Pvt. Ltd. Company giving the loan

Posts / Replies

[Susheel Gupta]

Dear Mr. Wadhwa

Problem can be for the person taking the loan. Since the loan is outstanding for eight years and even interest remains outstanding, the AO tends to add these transactions as time barring after three years/bogus entries. Should not be a problem for company giving the loan.

CA Susheel Gupta

9811004443