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Allowance of interest

19 May 2017

Assassee taken a term loan, EMI's of such term loan paid to bank directly by one of the debtor of the co. under an arrangement between co. and debtor, can the co. claim interest expense u/s 43B ???

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4 Replies

ROHIT YADAV (Finance Analysist) (607 Points)
Replied 19 May 2017

I think it will not allow. as section 43b provides that interest shall be allowed if such interest has been actually paid by him.

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SARATH SIVAN (18 Points)
Replied 22 May 2017

The act talks about only actual payment of such sum. whether any decided case law available for this situation ?

Vatsal (Student) (453 Points)
Replied 22 May 2017

It is one & the same, you are not paying but your debtor is paying, now you will adjust the same in his account, I think so interest should be deductible..

SARATH SIVAN (18 Points)
Replied 24 May 2017

The main twist is, let EMI be Rs. 200, 000 out of which interest comes to Rs 40, 000 and co. claims such interest. If the debtor had paid to company directly Rs. 200, 000 co. could not claim any expenditure. It may or can be argued that co. had such arrangement to evade tax.. by claiming expenditure as interest.. Now what u think ????