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Partner's remuneration u/s 40(b) of I.T.Act

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

12 March 2010

Assesse being a Parnership Firm. As per terms of Deed Partner's remuneration shall be provided as per section 40(b) of I.T.Act. Now for the Current Year there shall be book loss before providing the same. Whether is it mandatory to provide in books the parner's remuneration subject to maximun Rs. 1,50,000/- in case of Book loss for the year ended as on 31.03.2010.

regards.

Ca Sanjay Baheti

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7 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 12 March 2010

partner's remuneration shud be accounted whether or not there is profit.

regards,

ratan

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Divya K S (CA) (289 Points)
Replied 12 March 2010

Yes, according to Section 40 (b), remuneration must be provided @ 1,50,000 or 90% whichever is higher. Hence, when there is a loss, remuneration must be provided @ 1,50,000.

Prajakta Kulkarni (Student) (45 Points)
Replied 12 June 2010

what if the book profits of partnership firm is Rs.120000, hw much remuneration is to be shown, if Rs.150000 is provided ther will b a loss of Rs.30000, is it to b shown in same way or

108000 (90% of 120000) can be shown.

Sunshine (Helping All) (10575 Points)
Replied 12 June 2010

no..in any case it has to be higher of 150000 or 90% of book profit...so 150000 will be the remuneration to be provided......

SIVASIVA (FCA, Future CA) (4935 Points)
Replied 14 June 2010

FIRST OF ALL, THAT SECTION TALKS OF THE MAXIMUM ELIGIBLE AMOUNT

which can be claimed as an expenses. So, it is not mandatory that even if there is Book Loss, Partners' remuneration should be providied. NO. it is a OPTION only.

the point is the firm is E L I G I B L E to that extent. it is there option whether to provide or not.

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Manivannan.C (article clerk - CA pcc 1st grp cleared) (80 Points)
Replied 15 June 2010

i agree to siva siva . . 40b Talks about only the disallowance if remuneration exceeds as per the Act. . To the extent of RS.1,50,000 u can claim as expenses if u want. . if u claim ur loss vil increase so it can be carry forwarded to next 8 yrs so that it may be used to reduce the profit of future years too. .