14a v/s 40(b)

A partner is earning Interest and Remuneration Income from the firm- These are Taxable .

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He is also receiving tax free income from frim- i.e. Share in profit.

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14A is applied to find -whether the partner has incurred any expenditure  in  earning exempt income.

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Suppose the partner has paid interest in his personal capacity and

-simultaneously he is receiving interest from firm also- 14A can not be applied. 

-Only receivng exempt income from firm- 14A is applied. Such interest is not allowable.

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I

suppose partnership deed mentioned clause of 40(b), but in actual sense FIRM never paid interest to capital and remuneration then 

IS IT CHALENGABLE?

PARTNERSHIP DEED ALREADY MENTION CLAUSE 40(B) AND IN REAL SENSE IT IS PAID AS PER INCOME TAX ACT 1961 THEN HOW CAN IT WILL BE DISALLOWED?

SUPPOSE FIRM EARNS AGRICULTURE INCOME, IT IS A EXEMPT INCOME HENCE SECTION 14A WILL BE APPLICABLE BUT WHAT ABOUT SECTION 40(B)?

I APPRECIATE PARAS BAFNA'S SUGGESTION BUT WHAT ABOUT ABOVE MENTION QUOTE.

urgent required.......

Originally posted by : hardik bunha
	suppose partnership deed mentioned clause of 40(b), but in actual sense FIRM never paid interest to capital and remuneration then  IS IT CHALENGABLE?

 Assuming it as a fresh query....

The revenue is not going to loose anything  if the firm is not paying any remuneration to partners.  The  sole "challanger" would not mind- as such-if the firm does not obey 40(b).

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Coming back to the partner's Case-

If partner receives his Share from firm without receiving I&R... and.... suppose pay interest on capital borrowed to invest in the firm... In my view, AO may start thinking to disallow such interest in case it is claimed by the partner in his return ....against any income. 

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