Mishra Enterprises a partnership firm paid ₹40,000 by way of interest on loan taken from one of the friends of a partner. No tax was deducted at source for the interest payment. How much of interest expenditure is liable
CS Executive · Tax Laws · PYQS · June 2023
Mishra Enterprises a partnership firm paid ₹40,000 by way of interest on loan taken from one of the friends of a partner. No tax was deducted at source for the interest payment. How much of interest expenditure is liable for disallowance for non-deduction of tax at source?
Answer & Explanation:
Correct Answer: Option (A)
Official answer key: (A), (C). Official source note: Option C is correct assuming payment is made to Resident. Further option A is also considered as correct assuming payment is made to non-resident without deduction of Tax. In such case 100% of the amount is disallowed.
Topics: Income Tax Act, 1961
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