CMA Sivapriya (-) (238 Points)
25 August 2019Ms.A, a senior citizen allows a company to get loan on one of her bank deposits. The company repays the loan amount along with Interest after deducting TDS, to Ms.A's savings account.
Queries:
1. Is TDS Deductible on this transaction by the company?
2. Is the repayment of loan by the company to Ms.A be treated as her income, since it is an adjustment against the loan account?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(178007 Points)
Replied 25 August 2019
1. Yes.Company has regarded it as loan from the lady.
2. Any excess over and above loan amount or interest paid over it to bank will be treated as income of the lady.
Kapadia Pravin
(17259 Points)
Replied 25 August 2019
CMA Sivapriya
(-)
(238 Points)
Replied 25 August 2019
Suresh Thiyagarajan
(Student)
(3986 Points)
Replied 25 August 2019
1. If the individual is under tax audit he can claim the interest expenses as deductions while computing his profit chargeable to tax.
2. However, interest should have actually been paid as per sec 43B in order to claim the deductions.
3. With respect to principal portion, deductions will not be allowed under sec 80C as only housing loan repayment will be allowed as deductions.
4. Interest will be taxable in the hands of a person who had given a loan under the head Income from Other Sources.
Please correct me if the above solution has an alternative view.
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