Deduction of interest under section 57

[VINOD JINDAL]

Person borowed money form bank and give its futher to company to earned interest income

TOtal interest Received 50.00 lacs
Total Interest paid to Bank 52.00 lacs

My question is whether he is eligible for deduction of Rs 50 lacs or 52 lacs under section 57

[CAGOPALJI AGRAWAL]

First, it is illegal to give loan out of borrowed money as per RBI ACT.

without prejudice to above, it can be treated as business and claim the intt paid as exp.

AI Summary

Deductibility of interest under section 57: re-lending borrowed funds raises regulatory illegality but interest may be claimed as business expense. Where an individual borrows from a bank and re-lends those funds to earn interest income, re-lending may attract a regulatory prohibition under banking law, but alternatively the transactions can be characterised as a business activity, permitting the interest paid on the borrowed funds to be claimed as an expense against the interest income under the deductibility rules of section 57.