TMI BlogSection 40(b) - Payment of interest, salary etc. made by firm to its partnersX X X X Extracts X X X X X X X X Extracts X X X X ..... ion paid to partners by a firm are deductible if all the following conditions are satisfied: i. Payment of salary, bonus, commission or remuneration, by whatever named called is to a working partner. If it is paid to a non-working partner, the same shall be disallowed. ii. The remuneration shall be admissible only if the partnership deed either specifies the amount of remuneration payable to each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pays interest to a partner and the partner pays interest to the firm on his drawings, then the interest shall not be netted off. The interest received by the firm from the partners on their drawings is taxable in the hands of the firm as income u/h PGBP. The interest paid by the firm to the partners is allowable as per section 40(b) . Interest paid by the firm to its partners on their fixed capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Books Profits: Only the income u/h PGBP is to be taken Current year and brought forward depreciation is to be deducted. ( Section 32 ) Brought forward losses will not be deducted. ( Section 72 ) Chapter VI-A deductions are also not to be deducted. Remuneration is to be added back if it is debited to Profit Loss A/c. Interest paid to the partners to the extent it is deductible shall not be added ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative capacity, then interest paid by the firm to him in individual capacity, shall not be taken into account for the purposes of Section 40(b) and if the interest is paid to such individual as partner in representative capacity then such interest shall be taken into account for the purpose of this section. Explanation 2 to Section 40(b) Where an individual is a partner in a firm in his indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
