Partners Remuneration

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Surendra Parikh (Querist)
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02 December 2009 There has been a change in S.40(b) relating to the remuneration allowable to partners.

The original partnership deed of one of our partnership firms contained the following clause with respect to remuneration:-

"The yearly remuneration so payable to the working partners shall be computed as per the provisions and the manner laid down in section 40b (v) (2) read with explanation 3 of the Income Tax Act,1961 or any modifications in that respect for the time being in force, that is to say ;(a) In respect of first Rs.75000/- of Book Profit - 90%
(b) In respect of next Rs.75000/- of book profit - 60%
(c) In respect of balance of book profit-40%

Thus in light of the above do we need to make a supplementary deed to incorporate the changes in the Act.

If yes, then whether we can put a retrospective date of 1-4-2009 on a current dated stamp paper.

Kindly advise.

Regards

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 December 2009 Supplementary deed is possible.But retrospective effect on current date stamp paper will not be allowed in view of the provision contained in section 40(b) (iii).

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