In the case of any partnership firm including LLP the following amounts shall disallowed in computing the business income –
(1) Interest to any partner authorised by the deed-
Any interest payment authorised by the partnership deed in excess of 12% simple interest p.a.
(2) Remuneration to a working partner authorized by deed –
Any remuneration paid to a working partner authorised by a partnership deed in excess of the following limits
|Book Profits||Quantum of deduction|
|On the first Rs. 3 lakh of book profit or in case of loss||Rs. 1,50,000 or 90% of book profit, whichever is higher|
|On the balance of book profit||60% of book profit|
⇒ The term ‘remuneration’ is applied to denote payments in the nature of salary, bonus, commission.
⇒ Book Profit – The net profit as shown in the profit and loss account computed in accordance with the provisions for computing income from profits and gains. This amount should be increased by the remuneration paid or payable to all the partners of the firm if the same has been deducted while computing the net profit.
⇒ Working partner – An individual who is actively engaged in conducting the affairs of the business or profession of the firm of which he is a partner.