- Nature of expenditure disallowed:
- Interest, salary, bonus, commission, remuneration paid by an AOP/BOI to its members is not allowed as deduction in computation of income of AOP/BOI.
- If the AOP/BOI receives as well as pays interest to its members during the previous year, then the excess interest paid over and above the interest received shall be disallowed.
- Exception: The above conditions does not apply in the following situations-
- Where an individual is a member on behalf of or for the benefit of any other person, and interest is paid by AOP to the individual otherwise than as partner in a representative capacity.
- Where an individual is a member in his individual capacity and interest is received by such individual from AOP on behalf of or for the benefit of any other person.
- Allow ability of payments made to certain specified persons u/s 40A (2)
Nature of payment- The payment is in respect of goods, services or facilities supplied or provided by a relative.
- The amount paid to such relative is considered to be excessive or unreasonable as compared with the market value of such goods, services or facilities.
- The excessive or unreasonable sum shall not be allowed as a deduction.
- Specified persons for this section
