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Stcg & salary to partners

This query is : Resolved 
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(Querist)
12 September 2012 A partnership firm has sold a factory on which it claimed depreciation under block of assets and the block ceases to exist. The resulting STCG is Rs. 65,00,000/-.

Can this STCG be considered while calculating the maximum salary allowable to the partners?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
12 September 2012 As per Section 40(b)(v) of the Income Tax Act, partner's remuneration is to be calculated on BOOK PROFIT.

Explanation 3 provides that book profit means income taxable under the head Income from Business or Profession + Remuneration paid/payable to all the partners.

Since, STCG is taxable under the head Income from Capital Gain, it will NOT be considered as part of book profit for calculating partner's remuneration.
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CA Amit Rajput

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CA Amit Rajput (Expert)
12 September 2012 No STCG shall not be considered as part of profit for calculating partner's remuneration.
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