Accounts entry

CA CS Roshan Begrajka (Chartered Accountants) (267 Points)

27 March 2014  
Suppose an FD of Rs. 20000/- paid by X A/c (treated as loan)
and Maturity of Such FD Rs. 20771/- also received in X A/c
But beneficiary of such FD is Y (i.e FD in the name of Y)
Query No 1) what should be the treatment of such transaction in both books.
 
In X Books
1) at the time of FD
 Loan to Y (FD) Dr   20000
      to Bank                        20000
2) at the time of maturity
Bank A/c Dr               20771
       to Loan to Y (FD)         20771
3) Interest on such FD
Loan to Y (FD)....Dr           771
      to KYA HOGA ??      771
 
In Y Books
1) at the time of FD
 FD A/c Dr                  20000
  to X                                   20000
2) At the time of Interest
FD A/c Dr                        771
  to Interest on FD                   771
3) at the time of Maturity
X A/c Dr                         20771
to FD A/c                               20771    

 

query No 2) Interest on these FD is taxable in the hands of X or Y.