26 December 2017
Is Interest on Loan taken for the purpose of payment of indirect tax like Sales Tax (i.e. VAT/GST) as well as Direct Taxes allowable as an expense while calculating income from business (i.e. Income Tax, wealth Tax etc...)? If Yes/No, Why? (Kindly let me know as to what would be the nature of such loan i.e. Business Purpose or Personal personal )
The interest that is paid by the assessee on any sum borrowed by him for payment of income tax is not deductible from his net income since it is only application of profits and not expenditure incurred to earn profits.
Citation :- East India Pharmaceutical Works Ltd. Vs. CIT 224 ITR 627 (SC).
26 December 2017
Thank You Warrier sir for your reply. Can you help me sort out that , where such loan is taken as business loan and out of that the taxes are paid? (Because there is no such loan that would be specifically provided as a Tax Loan or anything of that kind, according to me). Kindly, provide some clarifications on this. Thank You
CAclubindia
