Interest on partners capital in case of loss
This query is : Resolved
Quick Summary
07 October 2024
Whether interest on partners capital allowed in case of loss ?
07 October 2024
Interest on capital is allowed only if there is profit.
07 October 2024
Please provide an explanation about section applicable and related provision
07 October 2024
Please provide an explanation about section applicable and related provision
07 October 2024
Interest payable to partners
So far as allowability of interest paid by a firm to its partners under section 40(b) is concerned, the following conditions have been prescribed by section 40(b):
(1) The interest payable by a firm to its partners should be authorised by and in accordance with the partnership deed.
(2) The interest payable by a firm to its partners should not be for a period falling prior to the date of such partnership deed authorizing the payment of such interest.
In case the above conditions are fulfilled pay interest in case of loss.
So far as allowability of interest paid by a firm to its partners under section 40(b) is concerned, the following conditions have been prescribed by section 40(b):
(1) The interest payable by a firm to its partners should be authorised by and in accordance with the partnership deed.
(2) The interest payable by a firm to its partners should not be for a period falling prior to the date of such partnership deed authorizing the payment of such interest.
In case the above conditions are fulfilled pay interest in case of loss.
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