Sec 44ae

Save Share

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)
Follow

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.
.
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

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!