12 September 2012
A partnership firm has sold a factory on which it claimed depreciation under block of assets and the block ceases to exist. The resulting STCG is Rs. 65,00,000/-.
Can this STCG be considered while calculating the maximum salary allowable to the partners?
12 September 2012
As per Section 40(b)(v) of the Income Tax Act, partner's remuneration is to be calculated on BOOK PROFIT.
Explanation 3 provides that book profit means income taxable under the head Income from Business or Profession + Remuneration paid/payable to all the partners.
Since, STCG is taxable under the head Income from Capital Gain, it will NOT be considered as part of book profit for calculating partner's remuneration.
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