Shefali Bajpai (Article Assitant & CA Final Student) (1148 Points)
28 December 2008Z Ltd., a running concern, received interest on the loans/advances made by it to its debtors. It contended that such interest was to be treated as business income. Is the contention of Z ltd., correct, if such interest was not on account of delayed payment towards sales or compensation/damages or an item relatable to its business.
Ashish Goyal
(Service)
(156 Points)
Replied 28 December 2008
If loans/advances are made in the ordinary course of business then only interest will be treated as Income from Business else income from other sources...
CA Akshat
(article)
(422 Points)
Replied 28 December 2008
the given interest should be treated as business income for sure
PiyushAgrawal
(Chartered acooutant in practice)
(575 Points)
Replied 29 December 2008
it shud related to B&P head.
Pavan Jain S
(Chartered Accountant)
(1575 Points)
Replied 29 December 2008
All interest incomes must be taxed under the head IOS irrespective of its nature.
However, it can be argued that the interest is in the nature of business income if advances are made in the ordinary course of business.
CAclubindia
