16 December 2008
As per Sectin 43 B of the income tax act, any interest on the loan from any bank or from any financial institution is disallowed unless if it is not paid befoe the due date for filing of return as per sec 139(1). is the overdraft is treated as loan? if it is considered as like any interest is credited with assessee's a/c but not paid before the due date, is this interest is allowed, please specify case laws if any?
16 December 2008
Clause (e) of section 43 B dealing with payment of interest on any loan or advances obtained from a scheduled bank was inserted by the Finance (No.2) Act, 1996 effective from the assessment year 1997-98. Originally it covered “term loan” but the Finance Act, 2003 enlarged the coverage by use of expression “loans or advances”. Now it covers wide gamut of bank finance availed by assessees such as term loans, cash credits, over drafts etc.
17 December 2008
In case the outstanding as on last day of the year is within the Drawing Power Limits of the loan then it is presumed that the interest debited has already been recovered.
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