07 October 2010
In a partnership firm can a partner do technical service and take fees by deducting TDS ? Or take sub contract by deducting TDS? Is there any restriction? Is it necessary to take remuneration and interest on capital u/s40b(iv)/(v)?Kindly clarify in detail....
09 October 2010
No.A partner cannot take salary or fee for technical service or sub contract payment by whatever name called otherwise than by complying with the provisions of sec.40(b). In other words, any payment received must be authorised by the deed of partnership and subject to the limits therein it is allowable. Contrary view could be found in CIT v.Rajaram Ramaswamy&sons (298 ITR 325).
But I would advise that the payment be in accordance with or authorised by the deed to avoid any controversy since the statute uses the expression " by whatever name called" in sec.40(b) in respect of working partner salary.
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