GK
TAXES IN INDIA
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Treated as revenue expenditure
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Capitalized
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All of the above
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None of these
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Detailed explanation-1: -Only interest on capital borrowed to purchase a capital asset for business purposes pertaining to the period after the asset is put to use, is deductible on year to year basis under section 36.
Detailed explanation-2: -In case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before commencement of production on such borrowed money can be capitalized and added to the cost of the fixed assets which have been created as a result of such expenditure.
Detailed explanation-3: -Section 24 provides for deduction for interest on a home loan of up to Rs 2, 00, 000 in a financial year. The assessee can claim a deduction up to Rs 2 lakh while computing his/ her total taxable income under the head of house property.