The turnover of a PARTNERSHIP firm is9.00 Lacs and the net profit is Rs.72,000 i.e. 8%. If partners salary(64800) and interest on capital (6000) be allowed as deduction then Net profit comes to 1200 is this correct for filing the return U/s 44AD without tax audit?
8 Replies
Dintakurthi Tirumala
(CA FINAL)
(15994 Points)
Replied 08 October 2011
Yes, it is correct.
OM SAI SRI SAI JAI JAI SAI
Devendra
(Chartered Accountant)
(4775 Points)
Replied 08 October 2011
Your calculations are correct. Go ahead and file the Income Tax Return.
Regards,
Devendra k
Swapnil Jain
(Finance - FP&A)
(564 Points)
Replied 09 October 2011
absolutely correct!!! move on for filing return.....
CA PRAVEEN SINGH
(MANAGER ACCOUNTS)
(2277 Points)
Replied 09 October 2011
2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :
Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.
so u are correct.......
CA NEERAJ SHARMA
(practice)
(408 Points)
Replied 10 October 2011
YES YOU ARE CORRECT IF
THE INTEREST ON CAPITAL IS NOT MORE THAN 12%
obeid
(learner)
(292 Points)
Replied 10 October 2011
Thanks for replies
Interest on cap is 12% only. What about Partners Salary i have calculated @ 90% of 72000 is this correct?
Jayesh
(Internal Auditor)
(214 Points)
Replied 10 October 2011
Dear Obeid,
Salary is to be computed on Book profit. Which is nothing but Net profit (after deducting allowable interest on capital(12%) but before deduction of salary). 72000(-)6000=66000. Rs. 66000 will be book profit. Now calculate allowable salary as per section 40(b).
Hope, this solves your query.
CA Hardik
(Profession)
(92 Points)
Replied 10 October 2011
Dear Obeid,
Your calculation is wrong as per section 40b
BOOK PROFIT 72000
- INT to partners 6000
BP for remuneration 66000
- 90 % Rem (40b) 59400
Taxable profit 6600.
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