is remuneration paid to partners allowed if the partnership deed contains the following clause
" The partners have agreed that the remuneration shall be determined as under
if the book profit is nil or loss remuneration= Rs 1,50,000
on 1st Rs 3,00,000 book profit remuneration= 90% of book profit or Rs 1,50,000 whichever is higher
on balance of book profit at the rate 60%
and the remuneration shall be shared in equal ratio
Yes, it is allowed. If there is any other method / clause regarding remuneration to partner in partnership deed, then first to calculate according to that method and debit it to profit and loss a/c and at the time of filing of return while calculating profit first add back the previous remuneration and then deduct the remuneration as per income tax method.
ya bt my point was tht sec 40(b) states remuneration will not be allowed if the deed contains a clause that "remuneration will be determined as per the relevent provisionf of income tax act" or something of that sort
so inserting such a clause as mention in the post wont fall under such a category???
CAclubindia
