Can deduction be claimed if not mentoned in partnership deed

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2014 I have a consultancy firm in terms of francise of Tata tele service which deduct Tds U/s 194H. As per form 26AS Tata has credited amount of Rs:- 182201 & deducted Tds of Rs:- 18222. As per partner ship deed we are two partners, As per partnership deed, salary to partners can be paid up to Rs:- 15000/- p.m, commission on sale to partners is 3000 P.A. I want to know would these deduction be claimed from the amount credited as per form 26AS or tax liability as per 26AS. And would I have to maintain books of Accounts on compulsory basis ?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

10 December 2014 The total amount credited (Rs. 1,82,201) is your INCOME.

From this amount ALL expenses are reduced to arrive at the profit.

Salary to partners & sales commission will also be reduced from the total income.

However deduction of remuneration to partners shall be subject to the provisions of Section 40(b)

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2014 Mr. Siddhartha Bhardwaj, It means If I deduct expenses from amount Rs:- 182201 such as office maintenance charges and salary to partners, commission to partners will reduce my income...as below:-
Income as per 26AS :- 182201/-
expenses for office maintenance: - 15000
Salary to partners (15000x2x4) : - 120000
Commission to partners (3000*2): - 6000
Total income (182201-141000) : 41201
Tax on total Income :- 41201x30.09% :- 12397
Tds deducted as per 26AS :- 18222
Tax as per calculation :- 12397
Refund :- 5825. Is above calculation correct........????????

Upgrade to CAclubindia Pro. Subscribe Now!

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

10 December 2014 Book profit as per Section 40(b) is Rs. 1,67,201

Maximum remuneration allowed as deduction is Rs. 1,50,000

Since the actual remuneration is less than Rs. 1,50,000 the actual remuneration shall be allowed as deduction.

Total Income = Rs. 41,201
Tax @ 30.9% = Rs. 12,371
TDS = Rs. 18,222

Refund = Rs. 5490

Note - I am unable to understand your calculation of salary.

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2014 Siddhartha Ji, I want to say my firm's income as per form 26AS is 182201/-. If I deduct expenses which I have incurred for office maintenance 15000,salary to partners Rs 120000 & commission to partners Rs 6000, then above amount will be deducted form my total income which is 182201. And we will find net taxable income that is 41201 on which I calculate tax @ 30%+edu+she edu which comes Rs:- 12371. Then as per form 26AS tds already deducted Rs 18222 and after deduction expenses we have found tds Rs 12371. Can we claim refund of Rs: 5490.(18222-12371)

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

10 December 2014 1. Yes you can claim refund of the excess TDS.

2. My only question was how you calculated the salary amount of Rs. 1,20,000

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2014 Siddhartha ji,
As per partnership deed salary is to be paid to the partners a sum of Rs:- 15000 p.m to two partners however actual salaries were paid to both of us only for 4 months, which comes Rs;- 120000. However what is the maximum amount of salary can be withdrawn as per partnership deed ?????

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2014 Siddhartha Ji, One more thing which I want to know, Is audit compulsory and do I have to maintain books of Accounts for verification to assessing officer ???????

Upgrade to CAclubindia Pro. Subscribe Now!

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

16 December 2014 Section 40(b) prescribes the maximum amount of remuneration eligible for deduction. The amount is calculated as under:

On the first Rs. 3,00,000 of the book-profit or in case of a loss - Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more

On the balance of the book-profit - at the rate of 60 per cent

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

16 December 2014 Since commission income is NOT an eligible business u/s 44AD, Section 44AA & Section 44AB apply to your firm.

As per Section 44AA you are required to maintain books of accounts if the firm's income exceeds one lakh twenty thousand rupees or gross receipts exceed ten lakh rupees in any one of the three years immediately preceding the previous year.

As per Section 44AB you are required to get your accounts audited if the gross receipts exceed Rs. 1 crore