1.
First Calculate Book Profits as follows:
Net Profit xxx
Add:
a)Salary already paid xxx
b)Expenses disallowed
but debited to P&L xxx
c)Depreciation already debited
in P & L xxx
Less:
a)Expenses Allowed but not
debited to P & L xxx
b)Incomes credited but
considered under other
heads of income xxx
c)Depreciation as per IT xxx
Book Profit xxx
Then Calculate Partner's remuneration as follows:
For AY 2007-08
in case of a firm carrying on a profession referred to in section 44AA (Medical,Legal,Engineering etc.)or which is notified for the purpose of that section—
(a)on the first Rs. 1,00,000 of the book-profit or in case of a loss
Rs. 50,000 or at the rate of 90 per cent of the book-profit, whichever is more;
(b)on the next Rs. 1,00,000 of the book-profit
at the rate of 60 per cent;
(c)on the balance of the book-profit
at the rate of 40 per cent;
Eligible Remuneration is (i) Sum 0f a,b,c above or (ii) Remuneration actully paid in the year
Whichever is higher.
Pls Note:
1. Payment of Remuneration and interest is to be authorised by partnership deed.
2. Remuneration is to be paid only to working partner.
3. Interest paid in excess of 12% is disallowed.
4. Interest and Remuneration is paid for the period prior to making amendmends in partnership deed regarding interest and remuneration is ineligible.
2) As per section 10 (10c) (viii) any amount recieved as VRS from CG or CG notified institutions are not included in the total income of the assessee if such amount does not exceeds Rs. 5 Lakhs.
Thus Rs. 5 Lakhs is exempted in Mr. Khan's Hands.
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