Intt rcvd from partnership firm

Hi!

A person has proprietorship business & have income from such business.

Apart from that the proprietor is also partner in a partnership Firm & receive its share of profit & interest & have share of income tax on behalf of the firm

Share of profit received from Partnership Firm is exempted. No issue as such

Querry 1) Interest Recvd from Partnership firm should be shown under which head ie. which will be the appropriate head ie either "income from BP" or "income from other sources"

Querry 2) Income Tax on behalf of the firm paid by the partner; Whether it should be deducted from capital of the partner. Is it right practice or any other way to treat the same.

Kindly enlighhten the issue

Rgrds

Replies (1)

Hi , I am of the opinion that interest received from partnership firm is taxable under the head income from bussiness or profession as interest is the consideration of doing something for the firm and also the partners and partnership is not a separate from each other .

Answer to your second query  is that income tax paid on behalf of the firm will be added to its capital account and it should be added as capital contribution in the firm and point to be noted no one can claim the deduction of such income tax paid as per the provision of section 40.

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