Partner remnuration sec (40b)

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Nidhi

Nidhi (Querist)
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18 December 2012 how to calculate book profits

Mohit Naithani

Mohit Naithani (Expert)
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18 December 2012 u hv to follow these steps to calculate book profit u/s 40 (b):

1. profit as per P& L account.
2. Add back salary given to partners if debited in P&L.
3. Make adjustment for expenses allowed/disallowed as per section 28- 44D.
4. If expenses /Income of other head like house property or income from other sorcse ,capital gain has been debited /credit then reverse back the such amount from profit & loss account.
5. As the depreciation b/f is covered under section 32(2) ,so adjustment should be made for b/f depreciation to calculate the book profit but adjustment can be done only upto maximum of profit of current year before depreciation minus b/f loss of the previous years .

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