Allowability of Interest Expense against Income from Partnership Firm

Shri. Suresh Sreeram Vs ITO (ITAT Bangalore) It is an undisputed fact that in AY 2016-17 the partnership firm incurred heavy losses from its business and was not in a position to pay any interest on capital for the investment. Due to the poor financial condition of the partnership firm, the partners of the firm mutually decided to delay the withdrawal of interest on capital from the partnership and withdraw the same only when the partnership firm starts making profits. Though the partners were entitled to interest on capital @12% p.a. from the partnership firm as per the agreed partnership dee...