Remuneration to Partners
This query is : Resolved
15 November 2020
In one of our case there is a loss in partnership firm after giving remuneration , and at per deed it is mentioned that "the above partners shall not be entitled to draw any remunertion in the accounting year period in which the partnership firm has sufferred loss on the basis of the book profit as computed under the provisions of the Income tax Act, 1961". Can we give remuneration upto the limit there is no loss in Profit and Loss account or we can not give any remuneration.
I.e Loss is Rs 111623.00
Add Remuneration Rs 144000.00
Book Profit Rs 32377.00
Can we give Remuneration upto Rs 32377/-
I.e Loss is Rs 111623.00
Add Remuneration Rs 144000.00
Book Profit Rs 32377.00
Can we give Remuneration upto Rs 32377/-
15 November 2020
You can give remuneration upto 1,50,000.
The maximum amount of salary, bonus, commission or other remuneration to all the partners during the previous year should not exceed the limits given below:
On first 3 lakhs of book profit or in case of loss – ₹ 1, 50,000 or 90% of book profits (whichever is higher).
On the balance book profit 60% of book profit.
The maximum amount of salary, bonus, commission or other remuneration to all the partners during the previous year should not exceed the limits given below:
On first 3 lakhs of book profit or in case of loss – ₹ 1, 50,000 or 90% of book profits (whichever is higher).
On the balance book profit 60% of book profit.
15 November 2020
As per 40(b)(v) read along with the cited clause of the partnership deed, the firm can give maximum remuneration of 29,139/- only ie., 90% of the book profit viz., Rs. 32,377/-.
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15 November 2020
Agree with Mr Chakrapani Warrier's reply.
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