NISHANT SIPANI
(Finance Controller)
(120 Points)
Hey Friends,
One of my Client has Other source Negative Income (App 300000) arose due to Interest payment and No Income in other source.
He has set off this against Income from Salary. A.O. raised Q abt Nature of other source -income and disallowed this.
& Intimation for Demand of Income tax.
is it appropriate?
If my client is right than plz suggest me the Favouring Points to him....
Ajay Kushwaha
(...)
(58 Points)
Replied 30 August 2011
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 30 August 2011
More details are req abt the source of income and the nature of int paid, pls elaborate your q .
NISHANT SIPANI
(Finance Controller)
(120 Points)
Replied 30 August 2011
Interest payment was for long term loan from localbank
Purpose of loan was investing in unquoted shares .It was a Mix purpose loan can`t be proofed for Particular.
It seems loan is taken from private persons and not from bank. I hope all transactions are through cheques. If not this shall create another type of problems.
Investment is made in unquoted shares. It is another area of problem.
What can be in the mind of AO : Whatever assessee is showing in the return are all cooked up transactions. Own money might be shown as loan. Unquoted shares are his assessee's own company.
Thanks
Max Payne
(employed)
(2574 Points)
Replied 30 August 2011
| Originally posted by : nishant | ||
 |
Hey Friends, One of my Client has Other source Negative Income (App 300000) arose due to Interest payment and No Income in other source. He has set off this against Income from Salary. A.O. raised Q abt Nature of other source -income and disallowed this. & Intimation for Demand of Income tax. is it appropriate? If my client is right than plz suggest me the Favouring Points to him.... |
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Option 1: You are so sure that it will be treated as loss from other sources.
AO cannot do anything. Loss from other sources can be set off against any income of the Previous year, including salary, as per section 71; but it cant be carried forward as there is no provision to the effect.
Option 2: The correct way to go about it will be to see wat this loan was utilised for, and to see how much proportion was invested to earn the other source income.. and only that much proportionate interest is admissible in computing IFOS... the rest of the interest may be rightly disallowed by the AO.
And, the info you have provided is only skeletal.
In depth info may yield different replies from members.
NISHANT SIPANI
(Finance Controller)
(120 Points)
Replied 31 August 2011
Thanks for your valuable suggestion.
Sir,
1.Interest payment was done to Bank by cheques. In Balancesheet rs.25000 is showing outstanding interest (credit bal.) & rest is paid and Loan is Long tern loan still continuous.
2.Investing in unquoted shares is registered small co. performing genuine business.Purpose of Investing is with growth of companies Director Remunerations, Dividends, and Appreciation in Shares prices.
3.Investment in Unquoted shares is shown in ROC return moreever charged ROC fees.
4.Loan was utilised for app. 85% in investing and rest for exp. like brokerage n consultancy exp. etc.
5.Can proportionately on ground of payment through cheques to bank is allowed or outstanding is disallowed? what supporting papers or facts i can put in front of AO?
Thanks for your precious time and suggestion.
CAclubindia
