Applicability of sec 40b

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 August 2011 Can a Partnership firm provide the commission or royalty income to its partners besides ,remuneration and interest on capital, on the business booked by a partner same as commission agents. If so, any consequences w.r.t. sec 40b.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 August 2011 Commission is covered under the ceiling of section 40(b) of the Income tax Act,1961. Question of royalty doesn't arise in 'commission agency'business. If at all provided in the books, considering, ejusdem generis, royalty payments are out side the ambit of section 40(b) of the said act.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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06 August 2011 Any payment made to the partner is to be governed by Section 40(b). If the partner has the necessary and adequate qualification then he can be paid commission or any other mode of payment.
For interest on capital your partnership deed should provide the same

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