05 November 2014
A Pvt. Ltd. Co. deals in shares i.e.dealing in shares contitutes its business. It makes investments in Mutual fund, debentures etc. It also gives loan to other parties. During the F.Y. 2013-14, it obtained a loan @ 24% p.a. For obtaining loan, it gave professional fees to another company who processed the loan and made arrangements to give us loan from Lender.
The company after obtaining the loan gave a part of loan to another person on which no interest is charged i.e. loan given is interest free. Part of loan is given to a party from whom we are charging interest. Some part of loan is used in making FDR with banks.
Query is:
Whether the professional fees paid for obtaining the loan will be allowed as deduction or same will be added in computing income under Head " Business or Profession".
05 November 2014
AO often disallow part of the interest on/fee paid for obtaining interest bearing loans when they are utilized for giving interest free loans.
05 November 2014
AO often disallow part of the interest on/fee paid for obtaining interest bearing loans when they are utilized for giving interest free loans.