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Remuneration to working partner under Section 40(b) restricted by:
ASpecified slab based on book profit (per relevant Section)
BReasonable amount per AO (per relevant Section)
CSalary in deed
DNo limit
Answer & Solution
Correct answer: A. Specified slab based on book profit (per relevant Section)
1. Section 40(b)(v) restricts working partner remuneration based on book profits.
2. First Rs. 6 lakhs: Rs. 3 lakhs or 90% (whichever higher); balance: 60% of book profit.
3. Excess remuneration disallowed in firm; not taxable in partner's hands.
_Source: ICAI BoS CA Final Paper 7, Ch 3 "Profits and Gains of Business or Profession"_
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