TMI BlogInsertion of new section 94B- Limitation on interest deduction in certain cases.X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of any debt issued by a non-resident, being an associated enterprise of such borrower, the interest shall not be deductible in computation of income under the said head to the extent that it arises from excess interest, as specified in sub-section (2): Provided that where the debt is issued by a lender which is not associated but an associated enterprise either provides an implicit or explicit guarantee to such lender or deposits a corresponding and matching amount of funds with the lender, such debt shall be deemed to have been issued by an associated enterprise. (2) For the purposes of sub-section (1), the excess interest shall mean an amount of total interest paid or payable in excess of thirty per cent. of earnings before i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finance charges that are deductible in the computation of income chargeable under the head Profits and gains of business or profession ; (iii) permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. . - Clause 43 of the Bill seeks to insert a new section 94B in the Income-tax Act relating to limitation on interest deduction in certain cases. Sub-section (1) of the said section seeks to provide that where an Indian company, or a permanent establishment of a foreign company in India being the borrower, pays interest or similar consideration exceeding one crore rupees which is deductible in computing income chargeable under the head Profits and gains o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch of the interest expenditure as has not been so deducted, shall be carried forward to the following assessment year or assessment years, and it shall be allowed as deduction against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year to the extent of maximum allowable interest expenditure in accordance with sub-section (2). It is further provided that no interest expenditure shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the excess interest expenditure was first computed. Sub-section (5) of the said section seeks to define the expressions associated enterprise , debt and permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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