Rent received from Bank Building

[satbir singhwahi]

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 .

AI Summary

Interest on Partners' Capital Deductible Only with Specific Clause for Property Acquisition Under Section 24(b) A partnership firm rented a building to a bank and inquired whether interest on partners' capital is deductible from rental income after municipal taxes and a 30% deduction. The response indicated that under Section 24(b), deductions require a certificate specifying interest payable for property acquisition or construction. If the partnership deed lacks specific provisions for interest on capital, and funds were introduced for the building's acquisition with a written interest clause, the deduction may be claimed. However, a general clause makes it challenging to prove the funds' purpose, likely leading to rejection by the assessing officer.