praveen (Chartered Accountant) (6971 Points)
07 March 2010Hi Everybody
I wanted to know if one can transfer a unsecured loan in a firm to individual partner and increase his captial share..
WIll there be any income tax effect on that.. because as i know all loans exceeding Rs.20K has to be closed through banking medium... Will that have an effect.\
Thanks in advance.
CA SURENDRA KUMAR RAKHECHA
(Practising CA at Surat)
(26263 Points)
Replied 07 March 2010
Regarding firm; there is no problem.
Person(P) has given loan to second partner (SP) to increase his (SP's) capital in the firm.
In his personal return and balance sheet SP has to show it as loan from P.
This is without account payee cheque and hence subject to penalty proceedings in the hands of SP.
shushantsinghal
(BCOM(HONS),C.A)
(283 Points)
Replied 07 March 2010
HII
HERE THIS IS POSSIBILE ONLY IN SUCH CASE WHERE PARTNER HAD PAID IT OFF FROM HIS SAVING A/C ......
THEN IN THE BOOKS OF FIRM WE CAN PASS A ENTRY
UNSECURED LOAN A/C DR.
TO PARTNERS CAPITAL A/C
THUS RESULT IN CAPITAL CONTRIBUTION BY PARTNER...
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