Income Tax Act, 2025
Section 4: Subs. by Act 33 of 2009, s. 15, for Items (1) and (2) (w.e.f. 12010).
4. Subs. by Act 33 of 2009, s. 15, for Items (1) and (2) (w.e.f. 12010).
224
(ii) interest paid by the firm to such individual as partner in a representative capacity and
interest paid by the firm to the person so represented shall be taken into account for the
purposes of this clause.
Explanation 2.—Where an individual is a partner in a firm otherwise than as partner in a
representative capacity, interest paid by the firm to such individual shall not be taken into account
for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of
any other person.
Explanation 3.—For the purposes of this clause, “book-profit” means the net profit, as shown
in the profit and loss account for the relevant previous year, computed in the manner laid down in
Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the
partners of the firm if such amount has been deducted while computing the net profit.
Explanation 4.—For the purposes of this clause, “working partner” means an individual who
is actively engaged in conducting the affairs of the business or profession of the firm of which he
is a partner;]
1[(ba) in the case of an association of persons or body of individuals [other than a company or a
co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860),
or under any law corresponding to that Act in force in any part of India], any payment of interest,
salary, bonus, commission or remuneration, by whatever name called, made by such association or
body to a member of such association or body.
Explanation 1.—Where interest is paid by an association or body to any member thereof who has
also paid interest to the association or body, the amount of interest to be disallowed under this clause
shall be limited to the amount by which the payment of interest by the association or body to the
member exceeds the payment of interest by the member to the association or body.
Explanation 2.—Where an individual is a member of an association or body on behalf, or for the
benefit, of any other person (such member and the other person being hereinafter referred to as
“member in a representative capacity” and “person so represented”, respectively),—
(i) interest paid by the association or body to such individual or by such individual to the
association or body otherwise than as member in a representative capacity, shall not be taken into
account for the purposes of this clause;
(ii) interest paid by the association or body to such individual or by such individual to the
association or body as member in a representative capacity and interest paid by the association or
body to the person so represented or by the person so represented to the association or body, shall
be taken into account for the purposes of this clause.
Explanation 3.—Where an individual is a member of an association or body otherwise than as
member in a representative capacity, interest paid by the association or body to such individual shall
not be taken into account for the purposes of this clause, if such interest is received by him on behalf,
or for the benefit, of any other person.]
2* * * * *
3* * * * *
and
(w.e.f. 12010).
224
interest paid by the firm to such individual as partner in a representative capacity and
interest paid by the firm to the person so represented shall be taken into account for the
purposes of this clause.
Explanation 2.—Where an individual is a partner in a firm otherwise than as partner in a
representative capacity, interest paid by the firm to such individual shall not be taken into account
for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of
any other person.
Explanation 3.—For the purposes of this clause, “book-profit” means the net profit, as shown
in the profit and loss account for the relevant previous year, computed in the manner laid down in
Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the
partners of the firm if such amount has been deducted while computing the net profit.
Explanation 4.—For the purposes of this clause, “working partner” means an individual who
is actively engaged in conducting the affairs of the business or profession of the firm of which he
is a partner;]
1[
in the case of an association of persons or body of individuals [other than a company or a
co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860),
or under any law corresponding to that Act in force in any part of India], any payment of interest,
salary, bonus, commission or remuneration, by whatever name called, made by such association or
body to a member of such association or body.
Explanation 1.—Where interest is paid by an association or body to any member thereof who has
also paid interest to the association or body, the amount of interest to be disallowed under this clause
shall be limited to the amount by which the payment of interest by the association or body to the
member exceeds the payment of interest by the member to the association or body.
Explanation 2.—Where an individual is a member of an association or body on behalf, or for the
benefit, of any other person (such member and the other person being hereinafter referred to as
“member in a representative capacity” and “person so represented”, respectively),—
interest paid by the association or body to such individual or by such individual to the
association or body otherwise than as member in a representative capacity, shall not be taken into
account for the purposes of this clause;
interest paid by the association or body to such individual or by such individual to the
association or body as member in a representative capacity and interest paid by the association or
body to the person so represented or by the person so represented to the association or body, shall
be taken into account for the purposes of this clause.
Explanation 3.—Where an individual is a member of an association or body otherwise than as
member in a representative capacity, interest paid by the association or body to such individual shall
not be taken into account for the purposes of this clause, if such interest is received by him on behalf,
or for the benefit, of any other person.]
2* * * * *
3* * * * *