23 August 2016
Dear Sir, As per Section 40(b) the following conditions needs to be satisfy in order to get deduction of remuneration 1. Remuneration should be paid only to a working partner. 2. Remuneration must be authorized by the partnership deed. 3. Remuneration should not pertain to period prior to partnership deed. 4. Remuneration should not exceed the permissible limit. If all the above conditions satisfied than you can pay remuneration to partner as per below limit to get full deduction of remuneration
1. If Book Profit is negative : Maximum Deduction Rs. 150000 as per section 40(b) 2. In case Book profit positive: On first 3 lakh of Book Profit : 1.5 lacs or 90% of Book profit whichever is higher On the Balance Book Profit : 60% of Book profit In your case if your 1st 3 conditions have been fulfilled than below amount of remuneration is allowed for deduction (assumed that no remuneration debited in P&L account to arrive at 13 lacs profit and all relevant adjustments as provided in section 28 to 44DB is considered) 1. 300000*90/100=270000 2.1000000*60/100=600000 Means 270000+600000=870000. Thanks.
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