Disallowance under Section 36 (i i i)

This query is : Resolved

jassi (Querist)
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24 June 2010 A co. purchased land on hire purchase.
Installments comprise of Principal amount and interest.

The land is still plain and no construction has been started yet.

Please tell that whether this interest paid should be disallowed under Sec 36 (iii)

Aditya Maheshwari

Aditya Maheshwari (Expert)
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24 June 2010 If further construction is going to take palce on the land and the land has been grouped under capital work in progress then the interest should be capitalised.

If land ready for its intended use then charge interest to profit & loss a/c and the same is allowable.