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Partner's salary (urgent)

SRINIVASULU SURE (CA in Practise) (80 Points)

02 January 2013

Dear All

Assessee is a partner and getting monthly fixed salary of Rs.50,000 from ABC & Co.

Can we bifurcate the fixed salary into Basic, HRA, Conveyance, LTA and Special allowance?. If bifurcated to various components as said, is it permissible to do so.

Please any one give reply as soon as possible

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7 Replies

CA Dauzi Pathan Imran Khan (Chartered Accountant in Practise) (1678 Points)
Replied 02 January 2013

For salary, the only thing is the partnership deed should have the clause. But as per Income Tax Act, when there is Employer- Employee relationship, the remuneration paid to employee will be called as salary. But in Partnership, there will exist Prinicipal- Agent relationship where Firm is Principal and Partner is agent. So, any amount getting from firm in status of Partner will be treated as income from Partnership firm and thereby income from business for each such partner. Hope the clarity u wanted has been given. Thanq

Devendra (Chartered Accountant) (4775 Points)
Replied 02 January 2013

Firstly, there is no Employer-Employee relationship. The Assessee being a Partner is receiving Salary from the Partnership Firm, accordingly, Salary received by the Partner is taxable under the Head Income from Business. Hence the salary cannot bifurcated into various Allowances.

Regards,

Devendra Kulkarni

1 Like

CA DIGANT CHADHA (Academician & Consultant) (195 Points)
Replied 02 January 2013

SALARY TO A PARTNER IS CHARGED UNDER HEAD INCOME AND GAIN FROM BUSINESS AND PROFESSION, SO THERE IS NO POINT OF EXEMPTIONS UNDER THE HEAD SALARY.

kavitha (studying final) (830 Points)
Replied 03 January 2013

Originally posted by : CA DIGANT CHADHA
	SALARY TO A PARTNER IS CHARGED UNDER HEAD INCOME AND GAIN FROM BUSINESS AND PROFESSION, SO THERE IS NO POINT OF EXEMPTIONS UNDER THE HEAD SALARY.

agree with this comment

1 Like

Kulwant Singh Khalsa (CA STUDENT) (105 Points)
Replied 03 January 2013

Agree with Devendra

subhajit behera (student) (65 Points)
Replied 03 January 2013

First Of all , salary income from A partnership firm is taxable in the hand of the partner under the head PGBP and the same is allowed to the firm, hence the bifurcation can be done from the firms Side.