There are three partners in a partnership firm having share of profit ratio as 60%, 30% and 10% and all are the working partners.
Now, the remuneration ....... can it be devivded among them as their share of profit ratio (as 60%, 30% and 10%)?
BASAK (NA) (45 Points)
05 April 2013There are three partners in a partnership firm having share of profit ratio as 60%, 30% and 10% and all are the working partners.
Now, the remuneration ....... can it be devivded among them as their share of profit ratio (as 60%, 30% and 10%)?
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 05 April 2013
In sec. 40(b) read with circular no. 739, it is mentioned that "the remuneration shall be admissible only if the partnership deed (A) either specifies the amount of remuneration payable to each individual working partner or (B) lays down the manner of qunatifying such remuneration,
but if it left to be determined by the partners at the end of the year.. then that would not be allowed.
in your case, e.g. 400000 is the upper limit as "lays down the manner of quantiying such remuneration", and partners would be given in ratio of 60%, 30% and 10%... then that could be acceptable as it falls in the portion after "or"... i.e. (B)
Regards,
CAclubindia
