Income tax

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YAGNESH HASMUKH DAVE (Querist)
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11 December 2015 OUR IS JOINT VENTURE FIRM SUPPORTED BY JOINT VENTURE AGREEMENT CONSIST OF THREE PARTNER IE 2 NOS PARTNERSHIP CONCERN & ONE PVT LTD.THEY HAVE CONTRIBUTED CAPITAL AND INT ON CAPITAL@12% AS PER JOINT VENTURE AGREEMENT CLAUSE IS SHOWN AS EXPENSES IN P L A/C U/S 40(B) OF THE I.TAX ACT UNDER SCRUTINY ASSESSMENT THE INCOME TAX OFFICER HAS ASSESSED AS AOP STATUS & DISALLOWED INT PAID ON CAPITAL TO PARTNERS.

WHETHER THE INCOME TAX OFFICER IS CORRECT OR NOT PL EXPLAIN ME BRIEFLY WITH SUPPORTING CASE LAW FOR STATUS ASSESSED AS AOP INSTEAD OF JOIN TVENTURE & INT DISALLOWED ON CAPITAL

Amol S Joglekar

Amol S Joglekar (Expert)
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11 December 2015 Treating it as AOP is correct as the partnership consists of artificial juridical person i.e. pvt ltd company and 2 firms. ( Partners of the firm are collectively called as FIRM. It does not have a separate identity per se apart from having a separate identity under income tax act. So? As per partnership Act, such partnership can NOT be called as FIRM and the AO has rightfully treated it as AOP.

But interest should have been allowed. Can you please tell me what is AO's contention in disallowing the same? So I can find out the case laws.

YAGNESH HASMUKH DAVE

YAGNESH HASMUKH DAVE (Querist)
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11 December 2015 AO HAS DISALLOWED INTEREST ON CAPITAL TO MEMBERS OF THE AOP CONSIDERING THE PROVISION OF SEC 40 CERTAIN AMT NOT DEDUCTIABLE THE SAID PROVISIONS ARE REPRODUCED BELOW

SEC 40 NOTWITHSTANDING ANYTHING TO CONTRARY IN SEC 30 TO 38 THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION
A- IN THE CASE OF ANY ASSESSEE

B-IN THE CASE OF ANY FIRM ASSESSABLE AS SUCH

C-IN THE CASE OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUAL.

ANY PAYMENT OF INTEREST,SALARY,BONUS, COMMISSION OR REMUNERATION BY WHATEVER NAME CALLED MADE BY SUCH ASSOCIATION OR BODY TO A MEMBER OF SUCH ASSOCIATION OR BODY

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