I sold a property for12 crore on which capital gain tax was 2 crore @ 20% but failed to pay advance tax on time. Now at the time of payment i take a loan of rs.1.75 crore from my other group companies @ 8% to pay my income tax.
My Quetion to you is that weather the Interest on these loan would be eligible as business expenditure.
please resolved it with specific case laws and income tax section.
As you will notice the words used in the para are,
"(ii) ANY SUM PAID---- ON ACCOUNT OF----- any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains"
i.e whether that be for interest on loan taken, interest u/s 234A/B/C or income tax expense itself, it will not be deductible.
Further reading the below link it will clarify all your doubts.
CAclubindia
