Interest

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2014 MY CLIENT HAS TAKEN A MORTGAGE LOAN..FOR ADVANCE AGAIN SHOP .. SO I WANT TO KNOW INTEREST WILL CONSIDER IN P&L OR CAPITAL A/C..

CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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17 November 2014 It depends for which purpose loan is taken.

If it is taken for the purpose of business only then it has to be charged to P&L A/c., and if it is taken to meet personal expenditure (not for business) then it will be debited to Capital account.

Thanks.

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2014 THANKS SIR BUT I WANT TO KNOW SHOP ALWAYS FOR BUSINESS PURPOSE .. AND THE LOAN IS MORTGAGE.. SO CAN I TAKE IT IN P & L OR NOT

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CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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17 November 2014 Dear Friend,

It is not the property that is given as a security which decides treatment of the expenditure, it is the purpose of the loan only which will decide where it has to be charged.

Even though the property given as a security is business asset, but if the loan is utilized for the purpose other than business purpose then it will not be debited to P&L A/c.