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Remuneration to working partners

SURESHAN (Company Secretary) (170 Points)

26 May 2014

A company is included as parnter in a partnership firm. The company will be represented by one of its authorised representative and he will also be a working partner of the firm. What is the legal status of the payment of remuneration to such a working partner representing the company.

Please share your thoughts on the subject.

Thanks in advance

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4 Replies

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 26 May 2014

actually the co. will be said to be the working partner and the authorised person will continue to receive his salary from such co. the max. rwmuneration allowable will be as per income tax act, i.e. for profits upto 300000 (remuneration shall be 150000 or 90% of book profit, whichever is higher) and above 300000 (60% of book profit)

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praveen (Chartered Accountant) (6971 Points)
Replied 27 May 2014

Company or its representatives cannot be working partner of the firm .... hence it cannot draw remuneration.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 28 May 2014

Eligibility For Partnership A partnership agreement can be entered into between persons who are competent to contract. Every person who is of the age of majority according to the law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject can enter into a partnership. The following can enter into a partnership 1. Individual : An individual, who is competent to contract, can become a partner in the partnership firm. If there are more than two partners in a firm, an individual can be a partner in his individual capacity as well as in a representative capacity as Karta of the Hindu undivided family. 2. Firm : A partnership firm is not a person and therefore a firm can not enter into partnership with any firm or individual. But a partner of the partnership firm can enter into partnership with other persons and he can share the profits of the said firm with his other co-partners of the parent firm. 3. Hindu Undivided Family : A Karta of the Hindu undivided family can become a partner in a partnership in his individual capacity, provided the member has contributed his self acquired or personal skill and labour. 4. Company : A company is a juristic person and therefore can become a partner in a partnership firm, if it is authorised to do so by its objects. 5. Trustees : Trustees of private religious trust, family trust and trustees of Hindu mutts or other religious endowments are juristic persons and can therefore enter into partnership, unless their constitution or objects forbid.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 28 May 2014

and i did some research on remuneration part of your ques. and came to the conclusion that remuneration can be paid to the co. but it shall be assessed in the hands of the person representing the co.