M/s.ABC is Partnership firm, where A,a partner, has capital of rs.500000 and given loan to firm @ 12% of rs.300000. Partnership deed provides interest on Capital as provided in Income Tax Act i.e.12%.
Whether interest on loan will be allowed as deduction or disallowed u/s.40(b)?
Hi rishub
Sec. 40 any payment of interest to any partner which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as such amount exceeds the amount calculated at the rate of [twelve] per cent simple interest per annum is not allowable as deduction.
its only suggestion and others r welcome
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