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Intt on Loan taken by partner-Deductability in firm busines

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(Querist)
09 December 2008 If a partner takes a loan against property which is in his name and uses the funds for firms business. Is the interest of such loan deductible in the hands of the firm.
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CA Pradeep Malhotra

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CA Pradeep Malhotra (Expert)
09 December 2008 In my opinion , the same is deductible eventhough the loan has been taken in partner's name as the funds has been used by firm for its business subject to satifaction of tax authorities in this regard
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CA Debasish Banerjee

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CA Debasish Banerjee (Expert)
09 December 2008 Since the loan is been taken to be utilised by the firm the interest thereof is deductable. The loan was provided against a security is a separate issue. In all cases you will find that loans are provided against personal guarantee of the partners.. which is also a form of security though the partners are separate from the firm and not the direct assets of the firm in real accounting sense.
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Late CA Sampat Jain

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Late CA Sampat Jain (Expert)
09 December 2008 Partnership firm can always acuire assets of incur liablities in the name of partner,if so agreed by partners
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