Allowable deduction for salary paid to partners the assessment year 2024-25.

(ii) As per section 40(b), remuneration paid to non-working partner whether in the form of salary, bonus, commission or whatever name called is not allowed to be deducted in computing business income. Hence, remuneration of 10,000 per month i.e.1,20,000 per annum paid to non-working partner Chand is not allowed as a deduction. Ajay and Biren, the working partners were each paid - 50,000 per month. Hence, the working partners totally received - 12,00,000 per annum as salary. As per section 40(b)(v) the salary paid to working partners will be allowed subject to the following limits: On the first - 3,00,000 of book profit or in case of loss:1,50,000 or 90% of book profit, whichever is moreOn the balance of book profit: 60% of the balance book profit Therefore, the maximum allowable working partner's salary for the A.Y. 2024-25 would be: Particulars ₹ On the first - 3,00,000 of book profit (₹ 1,50,000 or 90% of book profit, whichever is more) 2,70,000 On the balance book profit (60% of (16,60,000 -3,00,000) = 60% of 13,60,000 8,16,000 Total 10,86,000 Hence, the allowable partner salary for the A.Y. 2024-25 as per the provisions of section 40(b) would be - 10,86,000 as against an actual payout of 12,00,000 to Ajay and Ben and - 1,20,000 to Chand.