13 February 2010
Finance (No. 2) Act, 2009 with effect from 1-4-2010 Substituted it as Rs. 150,000 as the maximum deductible amount of remuneration in case the firm has losses.
13 February 2010
I am sorry experts. But please correct me if my interpretation is wrong. Section 40(b) as given is pasted below.
I took the reference of this only and the interpreted that Rs 50,000 is amended by 2009 Amendment and w.e.f from 1-4-2010 Rs. 150,000 is applied.
Although, I may be wrong in viewing that Rs. 50,000 is applied in AY 2009-10 and Rs. 150,000 will be applied in AY 2010-11. Is it so? Please throw some light on this.
Section > 40. Notwithstanding anything to the contrary in sections 30 to 67[38], the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession,
[(b) in the case of any firm assessable as such,
(i) any payment of salary, bonus, commission or remuneration, by whatever name called (hereinafter referred to as remuneration) to any partner who is not a working partner; or
(ii) any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is not authorised by, or is not in accordance with, the terms of the partnership deed; or
(iii) any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is authorised by, and is in accordance with, the terms of the partnership deed, but which relates to any period (falling prior to the date of such partnership deed) for which such payment was not authorised by, or is not in accordance with, any earlier partnership deed, so, however, that the period of authorisation for such payment by any earlier partnership deed does not cover any period prior to the date of such earlier partnership deed; or
(iv) any payment of interest to any partner which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as such amount exceeds the amount calculated at the rate of 85[twelve] per cent simple interest per annum; or
86(v) any payment of remuneration to any partner who is a working partner, which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder :
(1) in case of a firm carrying on a profession referred to in section 44AA or which is notified for the purpose of that section
(a) on the first Rs. 1,00,000 of Rs. 50,000 or at the rate of the book-profit or in case 90 per cent of the book- of a loss profit, whichever is more;
(b) on the next Rs. 1,00,000 of at the rate of 60 per cent; the book-profit
(c) on the balance of the at the rate of 40 per cent; book-profit
(2) in the case of any other firm
(a) on the first Rs. 75,000 of Rs. 50,000 or at the rate of the book-profit, or in case 90 per cent of the book- of a loss profit, whichever is more;
(b) on the next Rs. 75,000 of at the rate of 60 per cent; the book-profit
(c) on the balance of the at the rate of 40 per cent: book-profit
The following items shall be substituted for the existing items (1) and (2) of sub-clause (v) of clause (b) of section 40 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :
(a) 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;
(b) on the balance of the book-profit at the rate of 60 per cent :
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