Sir , the firm where i am a partner was disallowed salary paid to me as they had loss and my salary exceeded the allowable limit. However i missed this information and claimed as salary in my return as business income and paid tax accordingly. This case is for a.y 2013-14. I did not file any revise return for this A.Y. I have filed a rectification petition for correction of excess business income as there is no scope of revised return now. now my query is can I say that the salary received by me in excess over the prescribed limit is my drawings from the firm , Can the firm pass a reverse entry for excess salary paid in the current F.Y 2016-17.
Please advice both accounting and taxation treatment.
thanks
Partner's Excess Salary Disallowed Due to Firm's Loss; Refund Possible Under Section 237; Consider Appellate Remedy A partner in a firm received a salary exceeding the allowable limit, which was disallowed due to the firm's loss. The partner mistakenly declared this salary as business income in their tax return for the assessment year 2013-14 and paid taxes accordingly without filing a revised return. A rectification petition was filed to correct the excess business income. The partner inquires if the excess salary can be considered as drawings and if the firm can reverse the entry in the current financial year. Responses suggest that since the payment was per the partnership deed, no reverse entry is needed, and refund claims can be pursued under Section 237 of the Income Tax Act. The partner is advised to seek appellate remedy if the tax department continues to classify the excess amount as other income. (AI Summary)
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