Partner salary disallowance

This discussion addresses the disallowance of partner salaries exceeding the legal limit in a partnership firm, specifically when a partner dies during the financial year. The key question is whether the excess salary paid to the deceased partner is also subject to disallowance. The response clarifies that as per Section 40(b) of the Income Tax Act, any excess salary paid is disallowed and taxed in the firm's accounts, while remaining exempt in the partner's hands. The legal heir or representative is responsible for filing the deceased partner's Income Tax Return.