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TaxTMI 
Payment of Interest, Bonus, Commission or Remuneration by firm to its partners - Section 40(b)
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....muneration paid to partners by a firm are deductible if all the following conditions are satisfied: * Payment of salary, bonus, commission or remuneration, by whatever name called (hereinafter referred as remuneration) is to a working partner. If it is paid to a non-working partner, the same shall be disallowed. * The remuneration shall be admissible only if the partnership deed either specifi....
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....n for payment of remuneration to working partners:- deduction for payment of remuneration to working partners for both Business as well as professional firms has changed as under:- Book Profit % of amount of deduction (i) Loss or profit upto ₹ 3,00,000 Rs.1,50,000 or 90% of Book Profit whichever is more (ii) on the balance 60% of book profit Notes: - If a firm pays interest to a partn....
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....Net profit under PGBP for computation of book profits: * Only the income under the head PGBP is to be taken. * Current year and brought forward depreciation is to be deducted. (Section 32) * Brought forward losses will not be deducted. (Section 72) * Chapter VI-A deductions are also not to be deducted. * Remuneration is to be added back if it is debited to Profit & Loss Account. * Inte....
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.... of the remuneration under section 40(A)(2) on the ground that it is unreasonable and excessive. [ CIT Vs. Great City Manufacturing Co. - 2012 (12) TMI 875 - Allahabad HC ] * The CBDT had, vide circular No. 739 Dated 25.03.1996, clarified that no deduction under section 40(b)(v) will be admissiable unless the partnership deed either * specifies the amount of remuneration payable to each indivi....