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sec40(b) remuneration to working partner

Vinay Raja (student-IPCC) (699 Points)

30 November 2010  

section 40(b) of income tax provides that the exemption is

for first 3,00,000 or loss - 1,50,000 or 90%of BP whichever is higher

for the balace - 60%of BP

my question is what if there are two working partnes??

will the deduction be available for both i.e., two times or will it bw done on pari passu basis??


 24 Replies

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 30 November 2010

The rule is for firm / company, irrespective of the no of partners.

1 Like

Vinay Raja (student-IPCC) (699 Points)
Replied 30 November 2010

you mean that irrespictive of remuneration paid to no of working partners, the firm is eligible to the deduction only once!!

is that what you mean

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 30 November 2010

rule 40(b) itself is applicable to firm only, not on "number of partners"

Vinay Raja (student-IPCC) (699 Points)
Replied 30 November 2010

thank u in that case

Suresh Prasad (www.aubsp.com) (15565 Points)
Replied 30 November 2010

Originally posted by : U S S

The rule is for firm / company, irrespective of the no of partners.

 

Good Concept..........

Keep Sharing Your Views/ideassss/Knowledge...!


(Guest)
Originally posted by : U S S

The rule is for firm / company, irrespective of the no of partners.

agreed


(Guest)

AGREE WITH USS


(Guest)

Section 40(b) is disallowance provision.

Section disallows any thing paid over an above the limit fixed is disallowed.

prashant goyal (CA-Final) (100 Points)
Replied 30 November 2010

the above limit is for firm as a whole...

in case there is more then one working partner it would be distributed among them in agreed ratio in partnership deed

Santhosh Poojary (SIEMPRE AHÍ PARA TI) (15587 Points)
Replied 30 November 2010

in case there is more then one working partner then  it would be distributed among them in agreed ratio in partnership deed

R.SURESH SHRINIVASAN (Manager r- ESI-PF) (310 Points)
Replied 30 November 2010

First you must know that it is applicable to Firm bookprofit. hence it is allowed as whole net profit as computed by section 40(b). Suppose remuneration topartners Rs.400000 allowed by 40(b) rs 175000

Balance 225000 Taxable in frim. Rs.175000 should apportioned between the partners by salary ratio not  profit sharing ratio.

CA Krishna Chaitanya M (Chartered Accountant) (463 Points)
Replied 30 November 2010

this rule  is applicable to firm only, not applicable to company and aop...etc

irrespective of working of partners, for firms book profit this deduction allowed, such allowed remmuneration is taxable in the hands of partners with their remmuneration sharing ratio as per partnership deed

Vinay Raja (student-IPCC) (699 Points)
Replied 30 November 2010

Originally posted by : chaitanya

this rule  is applicable to firm only, not applicable to company and aop...etc

irrespective of working of partners, for firms book profit this deduction allowed, such allowed remmuneration is taxable in the hands of partners with their remmuneration sharing ratio as per partnership deed

agreed

i went through my study material, sec 40(b) is applicable only  to the firm not for company

Thanks all, for your clarification

Dintakurthi Tirumala (CA FINAL) (15977 Points)
Replied 30 November 2010

The 40(b) say about firm remunartion payable to all the working partners


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