Prepare the returns using latest return preparation software of income tax department, and iam able to file the returns without any problem, hope this will solve the problem.

Actually one more step needed to be followed in such case.
First you have to select option 00001 - Share of income from firm only under the NATURE OF BUSINESS Schedule.
Then you have to fill Interest in A24 Under Schedule BP.

please select "profit from firm only" in "nature of business" schedule, then the BS & P&L A/c shall becomes disabled.

This is not a defect in java utility and ITR will get defective if not corrected.

Originally posted by : Dhirajlal Rambhia
	Yes, this is the defect in the utility, this year. All those who have filled the partner's remuneration like this have got similar e-mail. At the same time there is no link for reply to mail in the e-filing site...... which means it is just informative mail, and not to be worried. Technically, you have filed perfectly, so question of any defect would not arise. CPC will automatically correct it.

This is not a defect in java utility and ITR will get defective if not corrected.

Originally posted by : chMahesh Babu
	Sir,my partnership firm Turnover 8lacs and net profit is 53000 after deducting of all including of partners remuneration and interest alsi....is audit is applicable...plz suggest sir.

If you'll claim taxable income below 8% of total turnover, then audit is applicable.

Dear Sir,

I filed ITR-3 as partner of a partnership firm for AY 2018-19.I got share of profit of 43357/- which I had shown in schedule - BP - Row No. A5 as "Income/receipt credited to Profit & Loss account which is exempt".

Apart form above I also have "Interest income from PPF(Public Provident Fund) of Rs.9909/- which I had shown in schedule -EI (Exempt Income - not to be included in Total Income).

Now the IT Deptt. sent me a notice subject as "Communication of proposed adjustment u/s 143(1)(a)" as given below :

IT Deptt. is now asking to revise the return accordingly.

My query is:

1. Whether "Share of Profit of partner from Firm" should be shown in EI-(Exempt Income) schedule along with BP schedule in ITR-3..??

2. Can I revise the return by showing Rs.43357/- in Exempt Income schedule along with Interest on PPF of Rs.9909/-, so the total exempt income will be Rs.53266/- (i.e.43357+9909).

Kindly, advise what should be my next course of action.

Thanks & regards,

Rahul Gupta

Dear Sir,

In ITR-3 for AY-18-19, Where do we report Profits received from partnership firm by partner? I had reported profits under Schedule BP in 36i in Section 44AD and also under Schedule IF, however department issued notice for defective return as below. Please request your view on below issue. Do i required to file revised return and if yes then under which head should i report Salary and profits received from Partnership firm.

Regards,

Kalpesh Bhavsar

I have filled ITR 3 for contract lecturer income under P&L gross receipts and after that it was reflecting in BP section A1 and the same has been submited.

today, i got an email starting that Disallowances/Defects identified in the Income. Kindly suggest, where should i mention the contract lecturer income in itr 3.

Kindly suggest and help me in this regard. Thanks!

@ Anil,

You have to remove the defect in ITR as suggested.

Upload return u/s. 139(9) in reply to the notice under E-proceeding, by providing business account details in schedule P&L and BS...

Sir....My name is Anil. I have entered the contract lecturer income in profit & loss sheet under gross receipt. and it is reflecting in BP - A1.

Kindly suggest, is there any problem will happen or need to any thing now. 

As you have not opted for sec. 44ADA, implies you have declared the income under normal assessment, whereby you are supposed to maintain books of accounts for the professional income. As such some details of expenditures w.r.t. the income earned and balance sheet details are required to be provided in the ITR schedules.

if you filed this ITR by using Genius software then remove this error by 

BUSINESS-BUSINESS/PROFESSION-Business Covered U/S, if any (44AD) and fill the turnover...

Please dont enter the 44AD details in BUSINESS--44AD,44ADA,44AE--44AD

As per Section 40(b), any sum paid by the partnership firm to the working partners in the form of salary, bonus, commission or remuneration, by whatever name called, shall be allowed as a deduction to the firm. If the book profit of the firm is negative, the maximum deduction of Rs. 1,50,000 is allowed to the firm for the partner's remuneration. Where no deduction is allowed to a firm in respect of remuneration paid to the partners, the same shall not be considered as income in the hands of the partners.

The meaning of the term 'income' is defined in an inclusive manner in Section 2(24). Among others, it includes any sum chargeable to income tax under Section 28(v), which is the interest, salary, bonus, commission or remuneration due to, or received by, a partner from the firm. The proviso to Section 28(v) provides that where any interest, salary, bonus, commission or remuneration has not been allowed to be deducted under Section 40(b), the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted. Section 40(b) prescribes the limits up to which the deduction shall be allowed to the partnership firm for the interest or remuneration paid to the partners.

In other words, where the interest or remuneration paid to a partner exceeds the limit prescribed or is not paid in compliance with the prescribed conditions, it shall not be allowed to be deducted to the firm, and correspondingly no tax shall be levied in the hands of the partner. 

A receipt which is not termed as income, cannot be assessed to Income-tax. Thus, to levy income-tax on any receipt, it is important to first see whether such receipt falls under the definition of income or not? If it does, only then it is relevant to check whether any exemption is available in respect of such income or not?

As per Section 2(24)(ve) read with Section 28(v), interest or remuneration received by a partner from partnership firm is considered as his income. The proviso to Section 28(v) clearly specifies that the remuneration or interest paid to a partner shall be adjusted with that amount which is not deductible to the partnership firm under Section 40(b). Thus, it can be concluded that the interest or remuneration not deductible in the hands of the partnership firm should not be considered as income of the partners.

Conclusion

As the interest or remuneration is not deductible in the hands of the partnership firm, it is not considered as income of the partners. When a receipt is not considered income, it is not required to be disclosed in the ITR Forms.

As per Section 40(b), any sum paid by the partnership firm to the working partners in the form of salary, bonus, commission or remuneration, by whatever name called, shall be allowed as a deduction to the firm. If the book profit of the firm is negative, the maximum deduction of Rs. 1,50,000 is allowed to the firm for the partner's remuneration. Where no deduction is allowed to a firm in respect of remuneration paid to the partners, the same shall not be considered as income in the hands of the partners.

The meaning of the term 'income' is defined in an inclusive manner in Section 2(24). Among others, it includes any sum chargeable to income tax under Section 28(v), which is the interest, salary, bonus, commission or remuneration due to, or received by, a partner from the firm. The proviso to Section 28(v) provides that where any interest, salary, bonus, commission or remuneration has not been allowed to be deducted under Section 40(b), the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted. Section 40(b) prescribes the limits up to which the deduction shall be allowed to the partnership firm for the interest or remuneration paid to the partners.

In other words, where the interest or remuneration paid to a partner exceeds the limit prescribed or is not paid in compliance with the prescribed conditions, it shall not be allowed to be deducted to the firm, and correspondingly no tax shall be levied in the hands of the partner. 

A receipt which is not termed as income, cannot be assessed to Income-tax. Thus, to levy income-tax on any receipt, it is important to first see whether such receipt falls under the definition of income or not? If it does, only then it is relevant to check whether any exemption is available in respect of such income or not?

As per Section 2(24)(ve) read with Section 28(v), interest or remuneration received by a partner from partnership firm is considered as his income. The proviso to Section 28(v) clearly specifies that the remuneration or interest paid to a partner shall be adjusted with that amount which is not deductible to the partnership firm under Section 40(b). Thus, it can be concluded that the interest or remuneration not deductible in the hands of the partnership firm should not be considered as income of the partners.

Conclusion

As the interest or remuneration is not deductible in the hands of the partnership firm, it is not considered as income of the partners. When a receipt is not considered income, it is not required to be disclosed in the ITR Forms.