05 January 2016
Dear Experts
In a partnership, one of the partner withdraw monthly Rs 140000/- it's not salary. Can I advise it considered as professional income and deduct tds u/s194 J. If it's allowable expenses.??. The deed remind silent on salary or professional income.
09 January 2016
If the partnership deed is silent you cannot make payment towards remuneration even to working partner or interest on capital. The payment should be authorised by the deed.
The amount is not deductible as per section 40(b)(i) if, 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.....
In my view the amount Rs. 140,000 per month paid to the partner is not deductible expense.
09 January 2016
Thank You sir. But I have a doubt about Professional Charges.If the firm will deduct TDS u/s 194J and paid the said amount to partner, is it deductable expenses ???
10 January 2016
As per section 40(b) any kind of payment is disallowed to a non-working partner (Other than interest on capital upto 12% as authorised by deed). In case of working partner, remuneration paid is allowable subject to limits specified therein.
If the professional charges paid to partner is allowed as expenditure by deducting TDS u/s 194J, the very purpose of introducing section 40(b) will be defeated.
CAclubindia
