TMI BlogPayment of Interest, Bonus, Commission or Remuneration by firm to its partners - Section 40(b)X X X X Extracts X X X X X X X X Extracts X X X X ..... t and remuneration paid to partners by a firm are deductible if all the following conditions are satisfied: Payment of salary, bonus, commission or remuneration, by whatever name called (hereinafter referred as remuneration) is to a working partner. If it is paid to a non-working partner, the same shall be disallowed. The remuneration shall be admissible only if the partnership deed either specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of remuneration to working partners:- deduction for payment of remuneration to working partners for both Business as well as professional firms has changed as under:- Book Profit % of amount of deduction (i) Loss or profit upto ₹ 3,00,000 Rs.1,50,000 or 90% of Book Profit whichever is more (ii) on the balance 60% of book profit Notes: - If a firm pays interest to a partner and the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of book profits: Only the income under the head PGBP is to be taken. Current year and brought forward depreciation is to be deducted. ( Section 32 ) Brought forward losses will not be deducted. ( Section 72 ) Chapter VI-A deductions are also not to be deducted. Remuneration is to be added back if it is debited to Profit Loss Account. Interest paid to the partners to the extent it is de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is unreasonable and excessive. [ CIT Vs. Great City Manufacturing Co. - 2012 (12) TMI 875 - Allahabad HC ] The CBDT had, vide circular No. 739 Dated 25.03.1996 , clarified that no deduction under section 40(b)(v) will be admissiable unless the partnership deed either specifies the amount of remuneration payable to each individual working working partner or Lay down the manner of quantifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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