29 April 2009
Capital sum has been paid by the partnership firm to partners retired on 31-03-07 on 30-09-2007 togather with interest. Can this interest paid during f.y. 07-08 to retired ex partners be treated as interest paid to partners for exemption from tax deduction U/s 194A(3)(iv)? does the term partner in this section include an expartner?
30 April 2009
The exemption under section 194A(3)(iv) is granted as the interest on capital is treated as income from business in the hands of the partners. Howerver the in the given situation Tax needs to be withhold u/s 194A as the income is in the nature of interest not business income. I agree with Manmohan.
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