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Partner's capital is a loan or deposit?

913 views 4 replies

Gitesh Jain

Professional

33 Points Posted on 13 January 2012

Dear Everyone,

Please reply me soon as a former partnet fild a case on the remaining partner and in judgment, the judge say that a payment to the partner in cash not not be made in excess of Rs. 50,000/-. kindly let me know the section so that i can file appeal against the order.

Also let me know that whether contribution by a partner in partnership firm is a loan or deposit in the firm and the same is governed u/s 269SS or 269T of the Income Tax Act and whether the partner can bring or withdrew his capital in cash or not.

and if not then to what extent the partner may withdrew in cash?

Replies (4)

CA Neil Ganatra

Partner - Gautam Joshi & Co.

871 Points Posted on 13 January 2012

Partner can bring any amount of captial in cash. same will be the case with withdrawal. However, if partner retires and at that time nothing is paid from his balance of Capital A/c then such balance has to be shown under unsecured loan. In that case that unsecured loan will be covered by section 269SS & 269T and hence it should not be paid in cash if the loan amount is more than Rs. 20,000/-.