Remuneration u/s 40(b)
This query is : Resolved
01 May 2008
What will be the allowable remuneration under Income Tax Act in following situation, if firm is carring on more than one business?
Non speculation profit fr0m one business-Rs. 400000/-, Non speculation loss from second business-Rs. 200000/- and Speculation loss- Rs. 200000/-. What will be remuneration? Rs. 50000/-??
Non speculation profit fr0m one business-Rs. 400000/-, Non speculation loss from second business-Rs. 200000/- and Speculation loss- Rs. 200000/-. What will be remuneration? Rs. 50000/-??
02 May 2008
U/s 73, speculation losses can be adjusted only against speculation gains. If there is no speculation gain, loss will be carried forward for following four A.Y.
For computing remuneration allowable we compute book profit which is actually taxable income before deducting allowable remuneration. Hence, here firm's book profit comes to Rs. 2,00,000/- (assuming no remuneration is deducted) on which remuneration allowable is Rs. 1,32,500/-. Pls verify other conditions like continuity of loss making business etc.
For computing remuneration allowable we compute book profit which is actually taxable income before deducting allowable remuneration. Hence, here firm's book profit comes to Rs. 2,00,000/- (assuming no remuneration is deducted) on which remuneration allowable is Rs. 1,32,500/-. Pls verify other conditions like continuity of loss making business etc.
02 May 2008
02 May 2008
CA. Komal Savaliya
as per your quiry non speculation loss is rs 200000/-& profit is rs 400000/- so net profit is rs 200000/- this amount is distributed to partners as per income tax act.
for speculation loss this can not be set off any other income only loss is set off against speculation profit so you will pay tax & carryforward speculation loss to next year return should be submitted u/s 139(1) of the income tax act
as per your quiry non speculation loss is rs 200000/-& profit is rs 400000/- so net profit is rs 200000/- this amount is distributed to partners as per income tax act.
for speculation loss this can not be set off any other income only loss is set off against speculation profit so you will pay tax & carryforward speculation loss to next year return should be submitted u/s 139(1) of the income tax act
02 May 2008
IF IT IS A PARTNERSHIP FIRM,AND WHEN THE FIRM IS TAXED ,THE SHARE OF PROFITS WILL NOT BE INCLUDED IN PARTNER'S INCOME AGAIN.
IF THE FIRM PAYS TAX ON RS 200000/ BOOK PROFIT,(RS 4 LAKHS NON SPEC,.PROFIT MINUS NON SPEC.LOSS OF RS. 2 LAKHS) THEN PARTNERS WONT GET TAXED AGAIN.
REMUNERATION ALLOWED(SEC 184 OF IT ACT) ON BOOK PROFITS
ON FIRST RS.75000 (90%)= RS.67500
ON NEXT RS.75000(60%) = RS.45000
ON BALANCE RS 50000(40%) = RS.20000
-----------
TOTAL RS.132500
-----------
SPEC.LOSS CAN BE CARRIED FORWARD FOR 4 YEARS,UNLESS IT IS SET OFF AGAINST SPEC.PROFITS.
R.V.RAO
IF THE FIRM PAYS TAX ON RS 200000/ BOOK PROFIT,(RS 4 LAKHS NON SPEC,.PROFIT MINUS NON SPEC.LOSS OF RS. 2 LAKHS) THEN PARTNERS WONT GET TAXED AGAIN.
REMUNERATION ALLOWED(SEC 184 OF IT ACT) ON BOOK PROFITS
ON FIRST RS.75000 (90%)= RS.67500
ON NEXT RS.75000(60%) = RS.45000
ON BALANCE RS 50000(40%) = RS.20000
-----------
TOTAL RS.132500
-----------
SPEC.LOSS CAN BE CARRIED FORWARD FOR 4 YEARS,UNLESS IT IS SET OFF AGAINST SPEC.PROFITS.
R.V.RAO
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Confusion around Form 26QB fields
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Tds on building rent monthly
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- RCM INVOICING FROM NOV-2024
- TDS under section and rate of TDS
- GST input on scooter purchased
- TDS under section 194Q and TCS under section 206C
- GST input on car insurance and repairs
- GST input on Diwali gift to employee
- GST input on Mobile Handset
- Material and freight in same invoice
- TDS under section 194J inclusive of reimbursement of expenses
- TDS on Material and Labour in same invoice
- Should I be worried about and rectify reporting Jan,Feb ,March 2024 foreign salary in schedule FA?
Trending Online Classes
CAclubindia
