23 September 2009
sirs , can we debit only remuneration , & not interest on capital , Is there any compulsion u/s 40(b) to provide for interest on capital to partners capital account , since in our case , if we debit interest on capital , partners capital will be overdrawn .....so can we ignore interest on capital on partners capital ...????
if interest is debited to P & L partners capital account is credited , how can it be overdrawn , if u credit interest to capital a/cs?
I dont think interest can the thrust on the firm , atleast a plain reading of 40(b) doesnt mention anything like that , nor it intends to . 40(b) looks like a machinery provision.
Check the partnership deed , what it mentions . Make a new attachment ( should be dated on the first day of the FY in which interest is sought not to be credited ) mentioning that the firm has decided not to credit any interest to capital accounts as mutually decided by partners.
CAclubindia
