25 January 2012
Bank/NBFC has released loan against property to an individual (running business – as sole proprietor). The loan received has been deposited in his savings account.
Later on, the amount was inducted in business as Proprietors’ Capital. The repayment & payment of interest is being made by the proprietory concern and debited to his Capital Account.
We solicit your advise - Can the interest be claimed as an expense and charged to the Profit & Loss Account.
If not, then can the amount introduced as capital be shown as deposit received from the proprietor & pay him interest and claim as expense.
CAclubindia
