in case a partner pays interest on drawing or interest on excess withdrawl of capital, can claim it as deduction against the remuneration received(taxable in the hands of partner) from the firm?????
in case a partner pays interest on drawing or interest on excess withdrawl of capital, can claim it as deduction against the remuneration received(taxable in the hands of partner) from the firm?????
Dear Shreya,
Interest paid on Drawings or excess withdrawal of Capital cannot be allowed as deduction to a Partner, since it cannot be said that the money was withdrawan by him for the purposes of business or profession..
However, if Partner is carrying on another businesss & he has used that money in that business then YES deduction of interest paid to the Firm shall be allowed as an expenditutre of such other busines.
Similarly, If amount is used for the purposes of House property then Deduction u/s 24 can be claimed.
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