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Interest on Loan

This query is : Resolved 
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(Querist)
02 August 2010 Dear Sir,

We have a partnership firm, and in the partnership firm the wife of the partner have invested in the firm

The question is whether interest paid to wife of the partner @ 15% is allowed or not.

Because in the hand on partner only 12% intt.is allowed.

Waiting for reply.
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subagana

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subagana (Expert)
02 August 2010 Parntership regulations are only for the partners and not for the realtives of the partners.
Hence if the loan complies with the other conditions in the deed then a higher interest is allowable.
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CA. BIJENDER KR. BANSAL

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CA. BIJENDER KR. BANSAL (Expert)
02 August 2010 yES, IT CAN BE ALLOWED AS PER MARKET RATE.
BECAUSE IT WILL BE SHOWN IN TAX AUDIT REPORT, PAYMENT TO RELATIVE U/S 40A(2)
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Ratan Sharma

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Ratan Sharma (Expert)
02 August 2010 It is allowed. it depend on the market rate of interest as well as the agreement between the parties.
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