Interest chargeable by firm to partner
This query is : Resolved
12 June 2013
In the present case the Firm has used its Overdraft Account to repay one of the Partner towards his capital account. In this connection the Firm has paid interest on its OD Account but has not charged interest to the concerned partner and has taken it in Expense Account.
I wish to know as per IT Act and under which section whether the expense shall be allowed/disallowed to the Firm?
I wish to know as per IT Act and under which section whether the expense shall be allowed/disallowed to the Firm?
12 June 2013
interest paid by firm on od limit for capital of partner add in income of firm .
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12 June 2013
Sir, Kindly clarify the words :
ADD In INCOME OF FIRM.
ADD In INCOME OF FIRM.
12 June 2013
"To repay one of the partner towards his capital account" means the partner was having certain credit balance in his capital account and the same has been repaid by the firm by utilising the OD facility.
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In such a case the OD interest can be treated as an expense. It may be argued that the firm is supposed to pay interest in terms of partnership deed on partner's capital account credit balance also.
.
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In such a case the OD interest can be treated as an expense. It may be argued that the firm is supposed to pay interest in terms of partnership deed on partner's capital account credit balance also.
.
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