28 April 2010
suppose a partner gives a loan to a firm in which he is a partner in individual capacity and the firm pays interest to him @ 15%, will the provisions of section 40(b) be attracted and interest in excess of 12% be disallowed?
28 April 2010
Yes provisions of section 40(b) be attracted and interest in excess of 12% be disallowed as maximum permissible interest u/s 40(b) is 12% to a partner. Also the loan given will be credited to either his capital or current account in the firm and not loan account.
CAclubindia
