10 April 2011
Mr. X is a partner in the firm and the firm is liable for audit. He wants to give Interest to some one after taking a loan. My Doubt is will he still have deduct TDS if he shows the Interest paid in his personal Account (ie. in his personal ITR)?
11 April 2011
Hi, from your question it appears that Mr.X has taken a loan from somebody for his personal purposes. In such a case, he can absolutely show it in his ITR and there shall be no need to deduct tax in such a case, as is clearly provided by the TDS provisions and explanatins thereto in the Act.
However, if he has taken this loan and applied it for the purpose of the firm and the other partners have knowledge thereof, then it shall be the loan of the firm and the firm shall be liable to pay the interest and deduct tax thereon if required.
12 April 2011
I M Partly Agree With Mr. Harsh karan Singh. merely by knowing that my partner has borrowed some money from somewhere, this Loan will belong to firm is a wrong Concept. First & foremost Liability to pay this Loan Belong to Mr. X and not the Firm & Partners thereof. So far as Interest Allowability is concerned in the ITR of Mr. X, Interest Recd. from Firm Minus Interest Paid on Unsecured Loan (in His Personal Account withOUT liab. to Deduct TDS Since Personally he is not crossing the Limit of 40 Lacs 60 Lacs etc. Hope Your Doubt is Removed Completely Now!! -- CA Manish J. Agrawal
CAclubindia
