M/s Silver Green is a Limited Liability Partnership firm (LLP) consisting of three partners J, K and L. Mr. J and Mr. K are working partners as per…

(i) Computation of Total income and tax liability of M/s Silver Green for A.Y. 2025-26 Particulars Particulars ₹ Profits and gains of business or profession Unit in SEZ 24,00,000 Profit from operation of warehousing facility 30,00,000 Add: Interest on capital @14% 11,48,000 Salary credited to all partners [₹ 9,00,000 x 3] 27,00,000 68,48,000 Less: Deduction under section 35AD [Capital expenditure incurred prior to commencement of business and capitalised in the books of account excluding the expenditure incurred for cost of land] [60lakhs - 35 lakhs] 25,00,000 43,48,000 67,48,000 Less: Interest to partners on capital [Maximum interest@12% is allowed as per section 40(b)] [₹ 11,48,000/14%*12%] 9,84,000 Book profits 57,64,000 Less: Partners' remuneration allowable under section 40(b)(v) (i) As per limit prescribed in section 40(b) On first 6,00,000 Higher of 3,00,000 or 90% of 6 lakhs 5,40,000 On the balance - 51,64,000 @60% 30,98,400 36,38,400 (ii) Remuneration actually paid or payable to working partners [₹ 9,00,000 x 2] 18,00,000 Whichever is less is allowed 18,00,000 PGBP/Gross total income 39,64,000 Less: Deduction u/s 10AA [24lakhs x 90 lakhs/120 lakhs x 50%, since this is the sixth year] 9,00,000 Total income 30,64,000 Computation of tax liability Tax @ 30% on 30,64,000 9,19,200 Add: Health and Education cess @ 4% 36,768 Tax liability 9,55,968 Tax liability (Rounded off) 9,55,970 (ii) As per proviso to section 10AA(1), no deduction under section 10AA shall be allowed to an assessee who does not furnish a return of income on or before the 'due date' specified in section 139(1). However, there is no such condition for claiming deduction under section 35AD. Since M/s Silver Green files its return of income for A.Y. 2025-26 in December, 2025 i.e., after the due date of filing return of income, it cannot claim deduction under section 10AA in respect of profits derived from unit in SEZ. It will be eligible to claim the deduction under section 35AD.