What is taxed in partner hands? admissible remuneration to partner or debited to pl?

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Kunjan (Querist)
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21 October 2024 what is taxed in partner hands?
rem. debited to pl of firm or admissible remuneration in firm's it return?
my view--> admissible rem. irrespective of what is debited in firm's prof loss.
Am i correct?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 October 2024 The remuneration debited to P&L is taxable in the partner's hands, regardless of whether it's fully admissible as a deduction for the firm. If the remuneration paid to partners exceeds the permissible limits under Section 40(b) of the Income Tax Act, the excess amount is not allowed as a deduction for the firm but is still taxable in the hands of the partner.

Kunjan

Kunjan (Querist)
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21 October 2024 that is double taxation . i wonder why no one raised this point? anyways, ty sir

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 October 2024 That is because of cap in ratio of remuneration to profit margin. It is not double taxed, but capped to derive (allowable) remuneration.

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