25 November 2018
Remuneration figure need not be given in the deed. But to whom remuneration payable to be mentioned in the deed. Remuneration as per income tax provisions payable may be mentioned in the deed.
26 November 2018
It's not compulsory to show exact remuneration in Deed, Specify working partner eligible they can specify percentage of Salary, Maximum salary allowed as Per 40(b) CBDT in its circular no. 739 dt 25/03/1996 have clarified that no deduction under section 40(b)(v) will be admissible unless the partnership deed either specifies the amount of remuneration payable to each individual working partner or lays down the manner of quantifying such remuneration.
Thus quantification of remuneration is required to be there in the partnership deed for it to be considered as authorized by the partnership deed and to avoid any disallowance u/s 40(b). It is seen that in many cases the partnership deed contains clauses like the following
“The partners have agreed that the remuneration to a working partner will be the amount of remuneration allowable under the provisions of section 40(b)(v) of the Income-tax Act and the amount of remuneration to working partner will be as may be mutually agreed upon between partners at the end of the year.
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