Remuneration to Partner

Mr. Aditya Maheswari

The proposed amendment wil take effect from 1-4-2010 accordingly will apply to the assessment year 2010-2011.

Clause (v) of section 40 reads as under:

"(v) any payment of remuneration to any partner who is a working partner, which is authorised  by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year -------"

As per the above the conditions laid down for allowbility of the remuneration are

(1) the said remuneration should be authorised by the paartnership deed

(2) the payment of the remuneration should be in accordance with the terms of the partnership deed

(3) the said remuneration should relate to the period falling after the date of such partnership deed.

Now what you have to do to claim the remuneration is

Execute an amendmend deed to the existing partnership deed with respect to the payment of remuneration to the working partners, specify the date in the partnership deed  when the amendment will come into force and also specify the terms of payment.

If you do that you have complied the conditions laid down in clause (v) of section 40 of Income-tax Act.

Hope you have got clarification.

Best Wishes

Sathikonda

DEAR, PARTNERSHIP DEED SHOWN THAT REMUNERATION PAYABLE AS PER RULES OF SEC 40 A - HOW THE REMUNERATION CALCULATED FOR THE YEAR - I.E. Rs. 150000/- IS APPLICABLE FOR WHOLE OF THE YEAR OR PART I.E. AFTER THE DATE OF BUDGET NOTIFIED.