Please provide a clarification whether a company can claim deduction of interest payment if the OD is availed by the director in individual capacity and transfer to the company for business purpose.
The director of a company holds mutual funds in his individual name. He can only avail overdraft in his individual capacity against the mutual fund holdings (Overdraft cannot be sanctioned in the name of the company against the security of mutual fund units of the director).
The lender suggested to avail the OD by the director in his individual capacity and transfer the fund to the company account for the renovation of the hotel in order to avail deduction of interest on loan.
Your thoughts please.
CAclubindia
