Investment by proprietory firm

Proprietary Firm A can advance a Loan amount to proprietary Firm B at a rate of interest agreed between them mutually. The amount received by Proprietary Firm B will be shown as Loan taken under current liabilties, further the loan taken by Proprietary Firm B shall not be taxable in the hands of the firm.

Whereas the interest received by proprietary firm A shall be taxable under the head income from other sources, and the interest paid by proprietary firm B to proprietary firm A can be claimed as expense.

Regards,

Devendra Kulkarni

Devendra,

Thanks for the info.

Will a Promissory Note be enough for the loan from A to B? Can names of Proprietory Firms be mentioned in a Promissory Note instead of name of persons?

How will repayment of loan be shown for income tax for B?

Regards.