Housing Loan interest transferred to P&L A/c..Urgent Sir

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Rajesh (Querist)

21 September 2010 Dear Experts,
Very urgent sir...pending this issue it is not finalised. Please help.
Housing loan interest paid by the client has been transferred to INTEREST A/c by passing a journal voucher as follows.

Interest A/c Dr. 1,25,000
To Housing Loan Interest A/c 1,25,000

This Interest A/c is transferred to P&L A/c including some other interest paid to the business purpose.

Even though this entry being JV, profit to that extent has been reduced.

My doubt is while computing the total income statement should i have to disallow this interest amount. I believe that this amount has to be disallowed while computing total income statement.

One of my colleague argues that since this being just JV or notional entry no effect shall be given in the total income statement.

Please inform me whether i am correct.

If there is any case law available supporting my claim pls. provide me that too.

Thanks for everyone who helped me.

With regards,
Rajesh.

Guest

Guest (Expert)

21 September 2010 You are right Mr. Rajesh..

Housing Loan interest should be get disallowed and subsequently it can be claimed us 24(b)

Simple logic behind this is

Housing Loan relates to INCOME FROM HOUSE PROPERTY HEAD

so it is obvious that it cannot be claimed as expenditure in P&L (INCOME FROM BUSINESS HEAD)

So it will be get added back to the Net Profit from Business

and claimed u/s 24(b).(i.e deduction from income from house property)

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