Income tax
This query is : Resolved
31 December 2012
THE ASSESSEE HAVING PROPRIETORY BUSINESS AND ALSO HAVING S/PROFIT FROM PARTNERSHIP FIRM DURING THE YEAR AY-2007-08 THE ASSESSING OFFICER IS DISALLOWING PROPORTIONATE INTEREST PAID ON LOAN U/S14A ON AVEARAGE INVESTMENT & TOTAL VALUE OF ASSESTS IN THE BALANCESHEET.
THE CAPITAL BALANCE AS ON 31-03-07 IN THE PARTNERSHIP FIRM IS NOT ONLY CAPITAL INVESTMENT BUT ALSO INCLUDED S/PROFIT CREDITED TO CAPITAL A/C FROM LAST 3 TO 4YRS THE BALANCESHEET SHOWS PROPRIATOR CAPITAL BAL AS ON 31-3-07 AT RS 11754015/- & CAPITAL BAL IN PARTNERSHIP FIRM IS 10503911/-
WHETHER DISALLOWANCE BY ASSSING AUTHORITY U/S 14A IS JUSTIFIABLE TO WHAT EXTENT
THE CAPITAL BALANCE AS ON 31-03-07 IN THE PARTNERSHIP FIRM IS NOT ONLY CAPITAL INVESTMENT BUT ALSO INCLUDED S/PROFIT CREDITED TO CAPITAL A/C FROM LAST 3 TO 4YRS THE BALANCESHEET SHOWS PROPRIATOR CAPITAL BAL AS ON 31-3-07 AT RS 11754015/- & CAPITAL BAL IN PARTNERSHIP FIRM IS 10503911/-
WHETHER DISALLOWANCE BY ASSSING AUTHORITY U/S 14A IS JUSTIFIABLE TO WHAT EXTENT
01 January 2013
The extent of justification can be determined only after knowing the facts as a whole.
.
It may be possible that borrowed money has been utilised in the firm, and the partner is receiving interest from the firm, at a similar rate, then in my view Section 14A
should not be invoked. However, the position in this regard has not been mentioned in your query.
.
Borrowed funds have totally been utilised in Prop. Concern and you can prove that the funds employed in the firm are own funds, then one can say that AO is not justified.
.
To substantiate your claim you may have to go with each inward borrowing transaction and its end use from the face of the bank statement.
.
.
It may be possible that borrowed money has been utilised in the firm, and the partner is receiving interest from the firm, at a similar rate, then in my view Section 14A
should not be invoked. However, the position in this regard has not been mentioned in your query.
.
Borrowed funds have totally been utilised in Prop. Concern and you can prove that the funds employed in the firm are own funds, then one can say that AO is not justified.
.
To substantiate your claim you may have to go with each inward borrowing transaction and its end use from the face of the bank statement.
.
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03 January 2013
If your investment is out of loan and if you are paying interest on that loan then yes it can be done otherwise not.You have to contast this issue.
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