Profit of partnership firm

ALOK RATNA (CHIEF CONSULTANT) (190 Points)

25 September 2011  

If the pasrtsnership firm has not paid any advance tax and there is little TDS, and if we are transfering the the profits from P & L account to the partners' capital account, then the amount so transferred is without charging tax, so is this right?

 

Generally the profit to be transferred to capital account of partner should be post tax so that in their hand it is tax free but in my case it is tax free when going to caiptal account of partners.  Also we can not deduct provision for IT in P & L account because of section 40. 

 

If wrong then what should be entry and how it is to be done???