Mr. Aarav Desai has two business units. Unit 1 is engaged in manufacturing of textile. During the year 2024-25, he incurred an interest expense of…

Mr. Aarav Desai has two business units. Unit 1 is engaged in manufacturing of textile. During the year 2024-25, he incurred an interest expense of 1,50,000 payable to Mr. Raj, a resident. However, tax was not deducted at source. The TDS was later deducted on 15th April 2025 and deposited with the Government on 17th May 2025. On 2nd August 2024, he purchased a new plant and machinery worth - 45,00,000, which was put to use on 1st November 2024. For this purpose, he borrowed - 25,00,000 on 1st August, 2024 and paid interest@10% p.a. Written down value of block of plant and machinery (15%) as on 1st April, 2024 is 95,00,000. Turnover for the P.Y. 2023-24 and P.Y. 2024-25 is 2.5 crores and 3 crores, respectively. Mr. Aarav Desai has Unit 2 in SEZ, which commenced operations in the A.Y. 2019-20. During the P.Y. 2024-25, the total turnover of this unit is 130 lakhs and business profit of 30 lakhs. The export turnover of this unit is 80 lakhs, which was received in India in convertible foreign exchange on or before 30th September 2025. Assume that Mr. Aarav Desai has shifted out of the default tax regime. From the information given above, choose the most appropriate answer to the following questions –