Partner salary distribution ratio to be same or not???
This query is : Resolved
05 July 2013
A partnership firm have a remuneration clause in partnership deed in a same way as normally every deed contains like compliance of Sec 40b.
Say for a FY max allowable salary is 30lac, and firm distribute among partner in ratio of 5:3:2 but profit sharing ratio is 3:1:1 My query is whether firm can distribute salary in this manner(5:3:2)??
Does income tax alllow it??
secondly can same partnership firm distribute salary in next year in 77:13:10, but again profit sharing ratio remain 3:1:1??? Does consistency have to be followed every year for income tax???
Partnership deed doesnot contain any clause regarding distribution of salary among partner, but defined only max amount allowed.
Please help and clarify
Say for a FY max allowable salary is 30lac, and firm distribute among partner in ratio of 5:3:2 but profit sharing ratio is 3:1:1 My query is whether firm can distribute salary in this manner(5:3:2)??
Does income tax alllow it??
secondly can same partnership firm distribute salary in next year in 77:13:10, but again profit sharing ratio remain 3:1:1??? Does consistency have to be followed every year for income tax???
Partnership deed doesnot contain any clause regarding distribution of salary among partner, but defined only max amount allowed.
Please help and clarify
08 July 2013
1) Profit sharing ratio and remuneration sharing ratio need not be same.
2) Please note that from asst year 1997-98 onwards, no deduction u/s 40(b) will be admissible unless the partnership deed either specifies the amount of remuneration payable to each individual 'working partner' or lays down the manner of quantifying such remuneration.
Ref :- CBDT Circular No. 739 dated 25-03-1996 reported in 218 ITR (St) 131.
2) Please note that from asst year 1997-98 onwards, no deduction u/s 40(b) will be admissible unless the partnership deed either specifies the amount of remuneration payable to each individual 'working partner' or lays down the manner of quantifying such remuneration.
Ref :- CBDT Circular No. 739 dated 25-03-1996 reported in 218 ITR (St) 131.
Message likes :
2 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Reopen of assessment proceeding
- TDS on Consultancy- Non DTAA
- Depreciation of fixed assets- coop housing society in mumbai
- COMMERCIAL INVOICE FOR MATERIAL AND FREIGHT
- Reprocessing of rectification order AY 2025-26
- FTS Taxable under 115A
- Gift Received from nonblood relative
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- Rental income gst and it purpose
- Tax Audit u/s 44AB for Transport Business A proprietorship is engaged in transportation business and
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
