Regarding partnership interest not paid but notional interest income is charging by it department
m suresh
(Querist) 03 September 2015
This query is : Resolved
sir,
a partnership firm deed contains interest provision to pay. due to some reason firm did not paid interest.
the partner of a firm is selected for scrutiny and a.o added the interest not paid by the firm as a notional interest income which was not paid by the firm.
what should we have to do
Anirudh
(Expert) 04 September 2015
Whether the partnership firm showed in its account liability towards 'interest' or not? (Though the partnership firm might not actually paid the interest to the partner)
Guest
(Expert) 04 September 2015
For A Perfect Reply Contact the CA Club of this Same Forum whose Email Id Is Just Below in this Thread
C. SANJEEVA RAO
(Expert) 04 September 2015
Even though interest is not actually paid, but provision was made in the accounts and shown in the liability side of the Balance Sheet, that means, the amount might have debited to the Profit & Loss A/c., then the action of the A.O. is correct. If, the answer is negative, then the A.O. cannot make such adjustment in its order, even though the clause is provided in the Partnership Deed. However, better u contact the local tax consultant, u can better appreciate the situation.
m suresh
(Querist) 04 September 2015
thank you for your reply sir
m suresh
(Querist) 08 September 2015
is there any case laws for this point
Anirudh
(Expert) 08 September 2015
You don't want to clarify the points raised. But only want answer to your query.
m suresh
(Querist) 09 September 2015
SORRY ANIRUDH SIR, THE PARTNERSHIP DEED HAS A PROVISION TO PAY INTEREST ON CAPITAL BUT PARTNERSHIP FIRM NOT MADE ANY PROVISION REGARDING INTEREST PAYMENT AND NOT PAID ALSO. SO, THE PARTNERS DID NOT GET THE INTEREST THE SAME WAS SHOWN IN THERE RETURNS AS THERE IS NO INTEREST FROM PARTNERSHIP FIRM BUT THE A.O ADDED THE INTEREST IN ASSESSMENT AS IT IS NOTIONAL INTEREST BECAUSE THERE IS A POINT REGARDING INTEREST IN PARTNERSHIP DEED
THANKING YOU
