Section 44ad

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CA Gautam Garg (Querist)
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17 March 2012 If a partnership firm claim his profits u/s 44AD I.e. 8% of gross turnover... Then can it claim remuneration to partners separately after taking profits equal to 8% of turnover....?

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17 March 2012 Deduction for partner's remuneration will be allowed in such case. Deduction under section 30 to 37 are deemed to allowed in such case where as partner's remuneration is allowed under section 40b.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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17 March 2012 Yes, it can separately claim partners' remuneration i.e. after calculating 8% of profits on gross turnover; remuneration can be deducted and tax is to be paid thereon.

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CA Gautam Garg

CA Gautam Garg (Querist)
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17 March 2012 Thanks for rep sir....
But after providing remuneration the profit will decrease from 8%, then shall the liability of tax audit arise on it....?
Because acc. To sec 44 AB if the assessee claim the net profits below 8% of turnover then tax audit is mandatory in that case..
And here is net profits not the book profits...

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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17 March 2012 No.
.
In the instant case; the assessee is not showing net profits below 8%.
.
The remuneration to partners are specifically allowable under the statue.
.
Conceptually; these are distribution of profits.

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