Sunder (Business) (165 Points)
29 June 2013What is the best way for Proprietory Firm A to invest money in Proprietory Firm B? Can it loan the money?
How is income on this investment transfered from B to A? Is it through interest on the investment amount?
What is the implication of this on income tax for A & B?
Devendra
(Chartered Accountant)
(4775 Points)
Replied 29 June 2013
Proprietary Firm A can advance a Loan amount to proprietary Firm B at a rate of interest agreed between them mutually. The amount received by Proprietary Firm B will be shown as Loan taken under current liabilties, further the loan taken by Proprietary Firm B shall not be taxable in the hands of the firm.
Whereas the interest received by proprietary firm A shall be taxable under the head income from other sources, and the interest paid by proprietary firm B to proprietary firm A can be claimed as expense.
Regards,
Devendra Kulkarni
Sunder
(Business)
(165 Points)
Replied 29 June 2013
Devendra,
Thanks for the info.
Will a Promissory Note be enough for the loan from A to B? Can names of Proprietory Firms be mentioned in a Promissory Note instead of name of persons?
How will repayment of loan be shown for income tax for B?
Regards.
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