Disallowance of Interest on Term Loan

This query is : Open

PRASHANT DEOCHAKE (Querist)
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29 April 2011 Dear Experts,

I am working in a Company org. Our Company's Principle business is letting out property on rent & sale/purchase of shares, Debentures & Bonds. We had taken Term loan for purchasing shares in the last financial year 2010-11. We had applied for the shares of X Co & paid whole loan amount for the purchase. But till this year end there is no allotment to us. So we kept whole amount as Share Application Money.

We had paid interest to Financial institute on term loan taken. My querry is whether Income Tax Dept accept our claim for the inerest for deduction from Income for 2009-10 or not. If not why & what treatment should be given in the books to get the same?

Regards

Prashant

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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30 April 2011 GENERALLY INTEREST ON CAPITAL BORROWED TO INVEST IN SHARES IS NOT ALLOWED AS EXPENDOTURE
GOING BY THE FACST GIVEN SINCE U R NOT IN A BUSINESS OF BUYING AND SELLING SHARES RTHE INTT WIL BE DISALLOWED
CA MANOJ GUPTA
JODHPUR
09828510543

PRASHANT DEOCHAKE

PRASHANT DEOCHAKE (Querist)
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30 April 2011 Dear Sir,

Thanks for the reply.
But it has been mentioned that Sale/Purchase shares is one of our principle business. We are showing it as our trading business.( In profit & Loss account)We are not showing it as our Invesments.

Please clarify

Prashant Deochake

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