Latest Query & Reply

 In case a partnership firm does not carry any business in FY 2017-18 but has assets and liabilities of last years, can we take interest on partners capital and remuneration upto 1.5 lakh even no turnover and if yes please tell me the source from which it is paid and sir also tell me if we claim this interest and remuneration whether Tax Audit is applicable or not because there is not showing profit of 8 %and loss is claiming. 

If another Partnership firm which has turnover in PY, and has profit before Interest on partners capital & remuneration is 21500/- but after interest on capital and remuneration net loss arises , can we do like this and claim loss and carry forward this loss without doing audit of firm or audit is necessary in this type of case.

Reply

Audit of accounts u/s 44AB is required where profits are less than 8% of the gross receipts or turnover and the income exceeds maximum amount not chargeable to tax. As stated in the query, that partnership firm is having loss, it does not exceed the maximum amount not chargeable to tax, therefore the assessee is not required to get the accounts audited u/s 44AB. 

Further in respect of deduction of remuneration of partners, an assessee can claim deduction of remuneration to partners even in case of loss, subject to limits and condition specified under section 40(b) of income tax act. 

As mentioned above an assessee can claim deduction of remuneration to partners even in case of loss, subject to limits and condition specified under section 40(b) of income tax act.  Since the firm has incurred losses, tax audit is not mandatory.