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Q. > Please Help: INCOME TAX-HOUSE PROPERTY VS BUSINESS EXPENDITURE
A PVT LTD IS PURCASING RESIDENTIAL PROPERTY BY TAKING HOUSING LOAN AND GIVEN THE PROPERTY TO THE DIRECTOR AS RENT FREE ACCOMODATION. AT PRESENT ALREADY A PROPERTY IN COMPANY NAME RENT OF WHICH CONSIDERING AS INCOME FROM HOUSE PROPERTY. NO ANY OTHER BUSINESS INCOME OF THE COMPANY AT PRESENT. THEN, I WANT TO KNOW THAT WHETHER INTT ON BORROWED CAPITAL FOR PURCHASE THIS RESIDENTIAL PROPERTY(WHICH IS GIVEN TO DIRECTOR AS RENT FREE) IS ADMISSIABLE AS BUSINESS EXPENDITURE AND CAN BE SET OFF WITH RENTAL INCOME OF OTHER PROPERTY. OR WHETHER THIS WILL BE ALLOWED UNDER INCOME FROM HOUSE PROPERTY. PLZ NOTE ALSO THAT AT PRESENT NO REMUNERATION TO DIRECTORS AS THERE NO BUSINESS INCOME OF THE COMPANY.
answered Jul 20, 2011 by CA Rajnish , gorakhpur
I think as the company is charging income from house propery then interst paid on loan for purchase the property is deductible from income from house property.it is no matter that property is giving rent or not.But it is not a business expenditure.interest will deduct from rental income and can be carry forward.
Experts Panelist
Comments
CA VIPIN GARG
22-Jul-2011 , 09:26:51 amDear Sandeep Ji, I think in somewhat different manner from My dear Rajnish Ji, what i think that it should be the business expenditure only as the company is having an aim of doing business and the house property is provided to the director just because he is an employee of the company so how can you claim the above interest as income from house property. I mean this is purely the case of tax avoidence, as far as my knowledge is concern. If you show this as income from house property and take deduction of interest, you will definately have to face the litigation problem in future. On the other hand if you show this as your business exp. then also you can carry forward your loss able to set off with your future incomes that will come from your business. if you are getting the same benefit from showing either head then, why are you taking any kind of risk ?????? Hope you will find your answer and feel free for some further query. Have a very nice day Aggarwal Ji............