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Sec 40b and sec 44ad (Income Tax)

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This query is : Resolved



( Author )
09 August 2012

A partnership firm having turnover of Rs40 lacs and book profit of 1.5 lacs. However i want to show profit u/s 44AD @ 8% i.e. Rs3.2 lacs. In this on what amount will remuneration to partners u/s 40b will be calculated?
Note: Partnership deed provides for remuneration to be calculated as per provision of sec 40b


CA Amit Jaiswal

( Expert )
09 August 2012

The partners remuneration is deductible from the profits subject to the limits u/s 40b.
The deductibility will be as per 40b only i.e. on book profits.



Sanket Shah

( Author )
10 August 2012

if profits are shown u/s 44AD, there is no requirement for maintenance of books of accounts. Hence no books and even P&L a/c is prepared. What will be book profit in this case?


prakash kochar

( Expert )
11 August 2012

Income u/s. 44AD will be 320000/- @8% of 40lacs. Out of this interest and remuneration as authorised by partnership deed will be allowed u/s. 40(b)and balance if any will be liable for tax in hand of firm.


CA Amit Jaiswal

( Expert )
15 August 2012

Agreed with Mr. Prakash


Sanket Shah

( Author )
15 August 2012

How will the book profit be calculated? Note: No books of accounts are maintained


CA UMESHKUMAR R. ACHARYA

( Expert )
16 August 2012

dear sanketji,

Section 44AD is a deeming section,
In other words when you opt to calculate profit under this section your profit will be deemed at fixed @ 8 % on sales whether you have maitained books or not.

You have make up your mind that book profit can be calculated only books are maitained but under section 44AD THIS IS NOT SO.



CA Amit Jaiswal

( Expert )
16 August 2012

You will have to keep the details of turnover which will be the basis for sec 44AD and will be usefull in future.


CA Amit Jaiswal

( Expert )
16 August 2012

You will have to keep the details of turnover which will be the basis for sec 44AD and will be usefull in future.


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