Calculation book profit for partner's remuneration u/s 40(b)

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SANTANU SAHA (Querist)
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18 March 2014 Is this calculation OK?

Book Profit Calculation (For Partner's Remuneration Calculation u/s 40(b):
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Profit Before Interest, Depreciation & Taxes: 4,00,000

Add: Prov. For Income Tax (Disallowable): 20,000

Profit after disallowables: 4,20,000

Less: Interest to partners @ 12% p.a: 1,20,000

Book Profit: 3,00,000

sushil kumar

sushil kumar (Expert)
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18 March 2014 Dear Santanu,
In this query, Interest to partners are allowable to the extent 12%. If 30000 are more than 12% then it is correct.
If partner salary allowed in books should be added back.
Otherwise ok.....

SANTANU SAHA

SANTANU SAHA (Querist)
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18 March 2014 I have used profit before interest, depreciation & taxes (which is also profit before any appropriation).

Then Why should i ADD Prov. of I.T to such profit in calculating Book Profit u/s 40(b)?

sushil kumar

sushil kumar (Expert)
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18 March 2014 Dear Santanu,
If you have charged the provision for tax in profit and loss a/c, then it should be added back, otherwise not.

CA P K AGRAWAL

CA P K AGRAWAL (Expert)
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13 October 2014 Profit should be taken after Interst and Depreciation

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