Is the person applicable for tax with all of following incomes
1. profit from partnership firm - Rs.57lacs
2. salary from firm - Rs.41 lacs
3. Interest on capital from firm - Rs. 32 lacs
Profit from partnership firm is an exempt income thus does not include in calculation of turnover..
from Assessment Year 1993-94, the legislature had to classify the remuneration and interest under one of the five heads of income. The income couldn't have been classified as Salary, House Property or Capital Gains. This leaves the option of business income or income from other sources. Legislature in its wisdom classified the income under the head Income from Business or Profession as Section 28(v). This fiction can never be termed as an income from a business activity. Being a partner in a firm, that too as a working partner or capital contributed can never be considered as an activity of business or profession.
Conclusion
When a partner does not carry any business activity, the remuneration or interest can never be considered for the purpose of invoking the provisions of 44AB of the Act.
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