Disallowance of interest expenditure in the hands of partner -...

Disallowance of interest expenditure in the hands of partner - investment as capital in the business of the partnership firm - Absence of earning any interest income on capital from the firm is no bar to claim the interest paid on borrowings for the purpose of contributing capital to the firm by the assessee as deductible expenditure. In such an event there would be loss under the head”PGBP” subhead “interest, salary from the partnership firm” and the assessee is entitled to set off the said loss against other income under the same head “PGBP”. - AT