Valerian Dsouza (Manager Audit & Taxation) (413 Points)
03 July 20133 (three) family Individuals have purchased a flat in Joint names with equal share.
They have a joint loan account with HSBC
They all are filing ITR, claiming benefit of Inerest / Instalment repayment and are required to file Balance sheet.
They all are depositing funds from their SB account to the joint home loan account.
How should the loan account outstanding appear in their Balance sheet?
Seeking your kind advice.
Thanks and regards,
Valerian Dsouza
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 03 July 2013
Why are they required to prepare B/S. Are thye carrying on any business.
As home loan is a personal expense it will not appear as a seperate item in the B/S. for e.g. in case of some persons carrying on partnership business if the partner has taken a home loan nad is repaying it from his capital account, then in that case Capital Account will be debited and Bank Account credited.
Valerian Dsouza
(Manager Audit & Taxation)
(413 Points)
Replied 03 July 2013
| Originally posted by : Giridhar S Karandikar | ||
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Why are they required to prepare B/S. Are thye carrying on any business. As home loan is a personal expense it will not appear as a seperate item in the B/S. for e.g. in case of some persons carrying on partnership business if the partner has taken a home loan nad is repaying it from his capital account, then in that case Capital Account will be debited and Bank Account credited. |
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They are having proprietory business, therefore are required to prepare Balance sheet, P & L A/c. and file along with ITR
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 03 July 2013
In that case also they can show the loss from house property i.e. the total interset paid/accrued during the year under the head Income from House property and claim the deductino from the Gross total Income.
As home loan is not a business expense so no need to show it in the B/S.
Akshata
(CA Final )
(324 Points)
Replied 06 July 2013
Home loan cant be taken as a business expense if they are not conducting their business at the said place..
Valerian Dsouza
(Manager Audit & Taxation)
(413 Points)
Replied 15 July 2013
| Originally posted by : Akshata | ||
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Home loan cant be taken as a business expense if they are not conducting their business at the said place.. |
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I.T. has asked them to file personal Balance sheet. finally I have found a way out. A separate company in TALLY by the name of that loan account is opened.
Entire loan account is credited that company, and 1/3 amount of that loan is debited to each stake holders.
whenever, loan is repaid, loan account has been debited and person repaying is credited.
Whenever interest is debited by bank, stake holders are debited proportionately and loan account is credited.
Plus in their individual books of accounts, whenever they repay loan, paying bank account is credited and loan account is debited. This helped maintaining individual repayment track.
Plus This helped reconsciliation of loan account bank statement also.
Hope this might benefit somebody.
Thanks and regards,
Valerian Dsouza
CAclubindia
