The profit and loss account of the Disha Darpan & Associates, a partnership firm, showed a net profit of 95 lakhs after debiting/crediting of…

Computation of Total Income of M/s Disha Darpan & Associates, a partnership firm, for the A.Y. 2025-26 Particulars Amount (in ₹) I Profits and gains of business and profession Net profit as per profit and loss account 95,00,000 Add: Items debited but to be considered separately or to be disallowed (1) Interest to partners on capital [As per section 40(b), interest to partners authorized by the partnership deed is allowable as deduction subject to a maximum of 12% p.a.] [₹ 9,75,000 x 1%/13%] 75,000 (2) Interest on loan taken from partner [As per section 40(b), interest to partners authorized by the partnership deed is allowable as deduction subject to a maximum of 12% p.a., whether it is interest on partner's capital or loan] [₹ 2,55,000 x 5%/17%] 75,000 (3) Royalty paid to partner X [Any remuneration, by whatever name called, paid to a working partner is subject to the limits specified under section 40(b)(v). Therefore, the royalty of 5lakhs paid to partner X must also adhere to these limits and should be added back while computing book profits.] 5,00,000 (4) Depreciation as per books of account 2,18,990 8,68,990 1,03,68,990 Less: Items credited but chargeable to tax under another head/expenses allowed but not debited 1. Profit on sale of building [Capital gain on sale of building is taxable under the head "Capital Gains". Since such gains has been credited to profit and loss account, the same has to be deducted while computing business income] 49,17,000 49,17,000 Less: Depreciation as per the Income-tax Rules, 1962 Depreciation as per Income-tax Rules, 1962 27,000 Depreciation on Motor car [₹ 9,70,000 x 15%] 1,45,500 Machinery [₹ 55,000 x 15% x 50%, since purchased and put to use for less than 180 days] 4,125 1,76,625 Book Profit 52,75,365 Less: Salary to working partners (i) As per limits given under section 40(b) On first - 6,00,000 @90% 5,40,000 On the balance of 46,75,365 @ 60% 28,05,219 33,45,219 (ii) Salary actually paid to working partners [₹ 35,000 x 12 x 2] 8,40,000 Deduction allowed being (i) or (ii) whichever is less 8,40,000 44,35,365 II Capital Gains Short term capital gain on sale of building forming part of block of asset [Since building was the only asset in the block] Full value of consideration 87,00,000 Less: Cost of acquisition [WDV as on 1.4.2024] 37,83,000 49,17,000 Less: Exemption under section 54EC [Investment in bonds of NHAI] [Available against depreciable asset, being a building held for more than 24 months and the payment for bonds has been made within six months from the date of transfer, exemption u/s 54EC would be available even if the allotment of bonds was made after the expiry of the six months] 26,00,000 23,17,000 Gross Total Income 67,52,365 Less: Deduction under section 10AA [Deduction u/s 10AA is not available since approval was granted after 31.3.2020 and it started its operation after 31st March, 2021] - Total Income 67,52,365 Total Income (Rounded off) 67,52,370