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Avnish (Querist)

18 September 2012 1. Is it mandatory to charge depreciation every year in case of partnership? what are the consequences, if we dont charge depreciation in any F.Y.?

2. what shall be the treatment, if we don't pay any interest to any partners on his Capital, instead we are giving him loan? Is this Possible? Can we do this?

3. If we have received any technical consultancy, for which we have paid the amount, can we capitalize it?

please help me on this doubts.........

Amol S Joglekar

Amol S Joglekar (Expert)

18 September 2012 01. For income tax purpose, even if you do not pass the entry for depreciation. it is deemed to have been considered. 02. The partnership deed empowers the payment of interest, salary, commission, bonus to partners. Please check the same. In the absence of any provision to that effect the Indian Partnership Act will be made applicable. 03. Payment for "Technical Consultancy" can always be capitalised if the benefits accruing out of it are going to spread beyond the financial year in which the payment is the technical consultancy is bought.

Avnish

Avnish (Querist)

18 September 2012 Thanks Mr. Amol.

Please also guide on the point, as in case any firm is in huge loss, and we have also paid salary to partners.
Now we are planning to reduce to the loss in the books by making the adjustment of the Salary as by deducting the same from the current account of the partners, so the net loss of books shall get reduced by the salary amount ( which is adjusted from current a/c of partners i.e. shown as deduction in current capital by repaying)

Will this treatment be correct?

Amol S Joglekar

Amol S Joglekar (Expert)

18 September 2012 Treatment is correct. (Accountancy wise) By the way, the adjective "HUGE" loss and routing salary through Current account, prima facie sounds contradictory (Unless of course SALARY is also HUGE)

Avnish

Avnish (Querist)

18 September 2012 NO, I shall show as reduction in Current Capital.

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