Interest on Loan
This query is : Resolved
17 September 2009
Hi,
A Holding co. have transferred some amount say 20 Lakhs to its subsidiary company for meeting their fincial requirement. My question is whether intt. on Rs. 20L is required to pay under Income Tax Act. If subsidiary co. has not paid any intt. on that amount then any disallowed may be there under Income Tax Act or there is any remedy for subsidiary co. not to pay Intt. on received amount from Holding co.
Also provide if any case law/notification or section in this.
A Holding co. have transferred some amount say 20 Lakhs to its subsidiary company for meeting their fincial requirement. My question is whether intt. on Rs. 20L is required to pay under Income Tax Act. If subsidiary co. has not paid any intt. on that amount then any disallowed may be there under Income Tax Act or there is any remedy for subsidiary co. not to pay Intt. on received amount from Holding co.
Also provide if any case law/notification or section in this.
17 September 2009
The Income Tax Act does not state whether interest is to be paid or not that is a business decision But if interest is paid Sec 194 A may be applicable.
17 September 2009
Hi,
There is no provision in the Income Tax Act for compulsory payment of interest. It depends between the agreement of parties.
However if the ITO feels that interest free advance is given to subsidiary and the assessee is paying interest on loan taken then the AO may disallow/restrict the interest paid for the amount of interest free loan given to subsidiary.
There is no provision in the Income Tax Act for compulsory payment of interest. It depends between the agreement of parties.
However if the ITO feels that interest free advance is given to subsidiary and the assessee is paying interest on loan taken then the AO may disallow/restrict the interest paid for the amount of interest free loan given to subsidiary.
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