25 January 2016
1. Partnership firm got the capital from partners Rs. 10 crore and invested in purchasing urban land plot to do Banquet business. The firm paid interest to partners on their capital Rs. 1.20 crore.
2. Whether above expenses are revenue expenses or capital expenses?
3. Whether Rs. 1.20 crore loss will be approved by I. Tax as loss of business of the firm?
25 January 2016
1. Interest payment to partners is a revenue expenditure. 2. The interest expense will be allowed only if the partnership deed provides for payment of interest to partners. 3. Loss arising to firm will be allowed.
CAclubindia
