Rent received from Bank Building

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..... Rent received from Bank Building
Query (Issue) Started By: - satbir singh wahi Dated:- 23-9-2013 Last Reply Date:- 25-9-2013 Income Tax
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Income Tax
A partnership firm has rented building to Bank.Now whether interest on Partners capital is deduductible as interest paid from rental income after deducting municipal taxes and 30 percent . Reply By Mohit Jain: The Reply: As pe .....

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..... r Sec 24 (b), states also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which re .....

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..... mains to be repaid as a new loan. In my view, if the partnership deed does not contain any specific provision for Interest on capital and Funds (Capital by partners) have been specifically introduced to acquire, construct the building with a written interest payment clause mentioning the percentage and if the partners submit an interest certificate in this regard to the firm, the same may be clai .....

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..... med as an expense under Sec 24 (b),. However, if the partnership deed contains a general clause of interest on capital, then it will be difficult for the assessee to show the nexus between fund utilized for business purpose and funds utilized for purchase of property and the amount outstanding thereon. And, A.O. will reject the deduction prima facie.
Discussion Forum - Knowledge Sharing .....

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