Manmeet Arora (CA) (111 Points)
23 September 2009How to calculate salary allowable to partners in following case?
Loss after allowing dep. and donation Rs. 7200000
Dep. Rs. 13270000
Donation - Rs. 21000
Loss is due to excessive current year dep.
Salary paid in books Rs. 200000
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 23 September 2009
salary paid through books shall be allowable exp. as there is no book profit.
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 23 September 2009
Dear Manmeet,
Assuming your query is for A.Y. 2009-10.
Book profit as explained vide explaination 3 of section 40(b), include profit after giving effect of Chapter IV-D i.e. section 28 to 44DD and so Depriciation/unabsorbed Depriciation as allowable undersection 32 shall be deducted while contruing book profit.
In your case, your book profit shall be;
Profit as per P&L (720000)
Add: Donation disallowed under section 37(1) 21000
Add: Salary/Remuneration to Partners xxxxxxxxxx
Add/less difference in Depriciaion/unabsorbed Depriciation as per books and as per IT xxxxxxxxx
Book profit
Plz note, if book profit is negetive the maximum remuneration shall be given to all partner shall not exceed Rs. 50,000/-
For your reference;
Explanation 3.—For the purposes of this clause, “book-profit” means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit.
Thanks
CAclubindia
