kiran (CA FINAL) (80 Points)
22 September 2010Q1.
for the purpose of determinig partners remuneration whether interest paid to partners is to be disallowed or not. if yes in whch situations it will happend.
Thanks 2 all
Q.2 If an individual is partner in a firm in represent status then interest paid to him whether attract any disallownance.......
Plz clarify with all possible siturations
Ayyswariya RG
(Knowledge Seeker)
(3711 Points)
Replied 22 September 2010
Interest upto 12% is allowed, In excess of 12% disallowed
vipul maheshwari
(CA FINAL )
(44 Points)
Replied 22 September 2010
it will be allowed upto 12% (excess will be disallowed) for computing book profit in respect of partners remuneration.
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 22 September 2010
It should not be exceeding 12%p.a. and it should be authorised by and in accordance with the partnership deed
Parth - CA,CS,CMA
(Learner)
(406 Points)
Replied 22 September 2010
Agreed with above answers..
And for ur second question,
Manmohan ACA, CS
(Chartered Accountant )
(14243 Points)
Replied 22 September 2010
Yes, interest paid to partner is allowed(i.e. to be deducted ) while computing remuneration to the minimum of following
(i) actual interest paid
(ii) interest @ 12% p.a.
(iii) Interest at the rate specified in partnership deed submitted to department
CA Prashant Gupta
(DGM (F & A))
(14068 Points)
Replied 23 September 2010
u/s 40(b) interest paid to partner is deductible if it does not exceed simple interest 12% p.a.
if interest is exceed 12% then excess amount will be disallowed.
if partner get interest in a representative capacity:
Explanation 1 says it is allowed . (it can be more then 12% p.a.)
if a partner get interest in both capacity in personal and in representative capacity then for personal interest 12% condition is applicable but in representative capacity interest it is full allowed.
kiran
(CA FINAL)
(80 Points)
Replied 24 September 2010
Thank u prashanth garu....... i got clear answer from u
u/s 40(b) interest paid to partner is deductible if it does not exceed simple interest 12% p.a.
if interest is exceed 12% then excess amount will be disallowed.
if partner get interest in a representative capacity:
Explanation 1 says it is allowed . (it can be more then 12% p.a.)
if a partner get interest in both capacity in personal and in representative capacity then for personal interest 12% condition is applicable but in representative capacity interest it is full allowed.
Sanket Kamath
(Student)
(64 Points)
Replied 30 September 2010
Pls note!
Thus to make it concise, interest actually paid as per the Partnership Agreement or Interest as computed @ 12% p.a. on Simple Interest basis, which ever is lower is allowed as deduction u/s 40(b)
Rgds.
mail/fb - sanket_kamath2004 @ yahoo.co.in
place - bangalore
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