| Question And Answer | |
|---|---|
| Subject: | Deduction of Interest paid from interest Income U/s 57 of the IT Act. |
| Category: | Income-Tax |
| Querist: | CA.P.N.Shangari |
| Answered by: | Advocate Rahul Hakani |
| Tags: | income from other sources, Interest deduction, Interest partnership firm |
| Date: | June 23, 2021 |
Sir,
An individual has taken a loan from bank of Rs2cr and has given as a loan to the firm as a partner.Would like to know whether the interest paid to the bank would be allowed as a deduction from interest income earned from the firm u/s 57(iii) as there being a direct nexus between taking of loan and lending the said amount to the firm.
If any expenditure is incurred for earning income u/s 56 then the expenses are allowable u/s 57(iii). If the Partnership Agreement provides for interest on loan and bank loan is raised for giving loan to partnership firm then the interest paid on bank loan will be allowed as a deduction u/s 57(iii). In Triumph International Finance India Ltd.v ACIT [2016] 161 ITD 464 (Mum)(Trib) it is held that if there is nexus between the interest received and interest to banks on borrowings , the same is to be allowed as deduction u/s 57(iii) of the Ac