Partnership firm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 January 2013 A partnership firm has three partners. For the year 2011-12 it has income from house property 11000000. There is no partnership business. Can we claim interest on capital and interest on partner's loan as an expense. Also will the same be taxed in the partner's hands?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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26 January 2013 1.The income from house property has got a separate head and computation has to be made by claiming Municipal Taxes, Standard Deduction and Interest on Capital borrowed for acquiring the property.
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The firm has to pay tax on above and share received in the after tax income, by the partner is not taxable.
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2. If there is no business in the firm provisions of Section 40(b) would not apply as the deduction of interest and remuneration can be claimed out of business income only.
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