AOP Relief calculation direct tax

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In illustration 14, the only income from AOP is by way of share in profit: hence we take that percentage of profit in as income of the members

Practice question: Prakash, member in AOP.... there the AOP pays interest, salary and byway of share of profit. Hence the entire amount (total of salary, interest and share in profit ) constitutes share income from AOP. Hence we take 6,12,000 instead of 20,000. Hope this explains.

Interest, salary and share of profit are nothing but apportionment of profit of AOP. All constituted income from AOP.

Unlike partnership firms where salary and interest are availed as deductions from profit and taxed in the hands of partner, and only share of profit is apportionment of profit and exempt in the hands of partner;

In AOP, where the entire income of AOP is not taxed in the hands of AOP when the members shares are definite and ascertained or they have income less than the exemption limit.