My partnership firm distributed loss Rs. 10 Lac in partners in previous year. In next year, we re-introduced the loss of Rs. 10 Lacs last year in profit and loss account through debited to partner's capital account on 01st of april of month. We claimed interest on loss of Rs. 10 lac but ITO want to disallow the interest to partners on capital against Rs. 10 lac loss. There is no changing in partnership status or partners.
Am I right or is ITO right. Please give reply with relevant case law or any supporting reference.
CAclubindia
