Interest for partner

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 September 2014 respected sir,
is there any ristriction in regard with interest paid to partners in respect of their capital in the firm ? . and how to determain the capital in the firm especially where there is no books of occounts and income declared under sec 44ad.

and roughly there is 6 laks capital in the firm at the end of the year.
please discuss

CA VISHWAKEERTHI.P.S.

CA VISHWAKEERTHI.P.S. (Expert)
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12 September 2014 There is restriction for interest on capital i.e., it shall not cross 12 % of your capital balance in the firm .

But proving that you not provided more than 12% lies with the assesses.

In your question you can allow interest on opening balance of capital outstanding and not on closing balance of Rs. 6 lakhs .