24 December 2007
On completion of assessment of partnership firm an addition of Rs. 150000 has been made. Can the partners claim higher remuneration as per the enhanced book profit after assessment. What is the procedure for that and whether the assessmentof partners will be reopened or it can be done u/s 154
25 December 2007
Remuneration is allowable to partners as per Terms of of the partnership deed . But the same is subject to maximum as per Income Tax Act . The limit in the Act is on the basis of Book Profit
25 December 2007
The definition of book profit for calculating maximum remuneration to partners is as follows: 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.
26 December 2007
Book profit as per explanation to Sec 40 (b) is the profit as determined according to Chapter IV-D. The ITO is also duty bound to complete assessment as per The Income Tax Act. By assessing my income he is also preparing the true and coorect income according to I.T. Act. As per my view, assessed income is the book profit what he is deriving after assessment
26 December 2007
The ITO Can not deprive me from the deductions which are provided by the Act. He has to find out the correct assessable income as per the Act after providing the deductions which have not either claimed by the assessee.
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