Scrutiny issue
This query is : Open
07 January 2014
Scrutiny Issue :
Assessee has paid interest on unsecured loan, and did not charged interest on loans and advances given.
can AO assumed that assessee must have charged interest on loans and advances given ? and can AO make addition sum of interest on loans and advances at the same rate as on unsecured loan ?
Is it necessary to charge interest on loans and advances given when assessee has paid the interest on unsecured loan ??
Assessee has paid interest on unsecured loan, and did not charged interest on loans and advances given.
can AO assumed that assessee must have charged interest on loans and advances given ? and can AO make addition sum of interest on loans and advances at the same rate as on unsecured loan ?
Is it necessary to charge interest on loans and advances given when assessee has paid the interest on unsecured loan ??
07 January 2014
Normally in most cases the AO makes addition of interest which is not charged on loans and advances given when he has paid interest on unsecured loans. This is because interest paid is claimed as deduction out of taxable income therefore the AO also scrutinizes whether any interest income is shown by the assessee on loans and advances given by him.
07 January 2014
To the extant of your capital the ITO cannot charge interest if you have given free of interest. If the amount exceeds the capital then the interest paid shall be disallowed in proportionate to the capital and loan. There are court judgments on this issue
08 January 2014
AGARWAL SIR, WILL YOU PLEASE MENTION THE CITATION OF FEW JUDGMENTs.
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