High Court Takes Liberal View On Limits Of Partners' Remuneration u/s 40(b)(v)

The following important judgement is available for download at
itatonline.org.

Md. Serajuddin & Brothers vs. CIT (Calcutta High Court)<http://bit.ly/40_b_v>

*For s. 40(b)(v) limits, P&L A/c profits (including non-business income)
have to be taken & not only "profits & gains of business" as computed u/s
28 to 43D
*



S. 40(b)(v) permits a firm to claim deduction of remuneration paid to a
working partner upto certain limits of the "*book profit*". The term "book
profit" is defined in Explanation 3 to mean "*the net profit, as shown in
the profit and loss account for the relevant previous year, computed in the
manner laid down in Chapter IV-D … *". The High Court had to consider
whether the term "book profit" meant the profit as per the P&L A/c (*which
included non-business income*) or the "*Profits & gains of business as
computed under Chapter IV-D*". HELD by the High Court:


*(Click Here To Read More <http://bit.ly/40_b_v>)*