Sec 44ae

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 July 2012 A partnership firm having two partners Mr. A & Mr. B purchased three heavy trucks:

May 14, 2011 : Rs. 20 lacs
May 28, 2011 : Rs. 18 lacs
August 16, 2011 : Rs. 24 lacs

Remuneration paid to the partners is Rs. 60,000/- each. Interest on partner’s capital is Rs. 20,000/-. Please advise how I should calculate the tax liability of the partnership firm u/s 44AE.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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15 July 2012 11*2*5000+8*5000=150000 is the Income as per Section 44AE provisions.
.
If you deduct Interest on Capital to partners of Rs 20000/- Resulting amount is Rs. 130000/ is Book Profit.
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Do not fix remuneration in Advance. See the Remuneration Clause in the Deed to check whether it permits the following.

As per Section 40(b)(v) , 130000/- can be paid to partners as remuneration. .

Querist : Anonymous

Querist : Anonymous (Querist)

17 July 2012 Please advise whether we have to pay tax @ 30% (+ cess) on Rs. 150000 which is the income as per Sec 44AE provisions or Rs. 10000 which is the net taxable income after deducting interest on capital and parners' remuneration

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