Remuneration to Partners

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This discussion explores whether the profit made from selling depreciable building assets can be included when calculating remuneration for partners. While initially suggested as possible, the consensus leans towards it not being eligible. This is because Section 50 treats such profits as short-term capital gains, taxable separately, rather than as business profit (PGBP) which is typically used for remuneration calculations.

VIPIN GUPTA

VIPIN GUPTA (Querist)

15 October 2020 Can the Profit on Sale of Depreciable Building be considered for the purpose of calculation of Remuneration as the block has become nil.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 October 2020 Yes, such profit can be considered for the purpose of calculating remuneration to partner.

VIPIN GUPTA

VIPIN GUPTA (Querist)

07 December 2020 Sir, I want to draw your attention to Sec 50 which will be applicable in case of sale of depreciable assets. Which says it will be short term capital gain and taxable under Sec 50 and not PGBP so it can not be used for payment of remuneration

VIPIN GUPTA

VIPIN GUPTA (Querist)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

07 December 2020 Short term capital gains of business assets will be business profit credited to p&l account.

VIPIN GUPTA

VIPIN GUPTA (Expert)

07 December 2020 Sir it will be credited to profit and loss account but we have to take it to capital gain so book profit will decrease . Sir any case law for reference

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

07 December 2020 Agree with your views it's short term capital gains not to considered as business income for the purpose of calculating remuneration to partners.

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