How to show income of individual person of the same business

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2015 there is three brother doing a business of the jewelery shop,Now the income generate from the jewelery shop is distributed among themselves in any certain way.I want to know how to show the income of the each brother in income tax file.Though they are doing the same business earning.

Amol S Joglekar

Amol S Joglekar (Expert)
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29 December 2015 is it a partnership firm? Show it as salary from firm. Which is regarded as business income in the hands of partners.

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2015 No, this is not partnership firm it is a only jewellery shop which trade license is in the name of the father , but it is run by three sons.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2015 plz provide the resolution

Amol S Joglekar

Amol S Joglekar (Expert)
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30 December 2015 I see. Then there is no any need to pass the resolution. The three can take salary. And it will be taxed as salary income in the hands of three brothers respectively.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2015 How can one take salary from his own business, even though it is not a partnership firm.??The brother is distributing the profit of the shop in their own mutual consent.

Amol S Joglekar

Amol S Joglekar (Expert)
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30 December 2015 You said, the liscence is in the name of FATHER.
So the father is OWNER. The ownership of a business is separate than RUNNING of the business.
Three brothers are running the business of their FATHER.
The so called distribution of profit by the three brothers is in fact the SALARY taken by them for running the business.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2015 sir, here license refer to Trade license which they will amendment in their own name very soon.As his father is no long alive so that case showing salary from business is not justifying.Moreover in the Trade license the name of the Shop is mentioned not the name of the owner.

Amol S Joglekar

Amol S Joglekar (Expert)
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30 December 2015 Try to disclose the FACTs in one go. ok?

Anyway...... now first tell me WHAT IS THE CONSTITUTION OF YOUR SO CALLED TRADE LISCENCE?
To the best of my knowledge, while applying for trade liscence, a form is required to be filled in which the details as to the owner of the liscence are written. Please try to explore that. Ok?
Now considering the sad demise of father, the three sons have to decide, what form of organistion they want to trade in..... Proprietorship or partnership or LLP or OPC or Private Company. Accordingly the profit shall be termed either as salary or business income or otherwise.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2015 yes sir you are right,the three brother has decided that elder one will take up the license in his own name and rest the business will run as earlier at the time of his father i.e profit will be mutually distributed among themselves.So sir do you still suggested to opted for the salary generated from business.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2015 But they dont convert it in partenership or pvt company.They keep its as only business which profit ll be distributed.

Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2015 sir one more thing they have a stock of worth approx 15 lac but they do not have bill for this purchase and they dont maintain the selling bill also.So sir in such case how to show the stock in the shop which is run by three brother.how to show the stock in individuals brother file.

Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2015 SIR, PLEASE MY PROBLEM.

Amol S Joglekar

Amol S Joglekar (Expert)
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31 December 2015 it should be in the long term interest of the other two brothers to take the share of profit as Salary. In future, if the papers are required anywhere say passport, loan, insurance and so on so forth.... they can show that they are earning salary.

Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2015 very much thank u for the answer , but one thing need to be clear that they have a stock worth of 15lac in the shop.now at the time of preparing the individual how the stock will effect in each file.Whether the amount of should be shown in each file equally or differernt way

Amol S Joglekar

Amol S Joglekar (Expert)
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04 January 2016 stock basically belongs to father. Every year the three brothers were sharing profits equally. So, now after the demise of father, the stock will belong to the three brothers in equal proportion.

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2016 thank u very much sir a lot of problem has been solved.

Amol S Joglekar

Amol S Joglekar (Expert)
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04 January 2016 You are most welcome.
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