14 August 2017
"Whether Partner's Salary and remuneration are allowed from 44AD Profits or deemed to be allowed whenever presumptive is opted ?"
Section 44AD starts with the following phrase
"Notwithstanding anything to the contrary contained in sections 28 to 43C",
It means, all these sections will be overruled whenever 44AD will be opted.
For eg :- Expense under 37(1), Depreciation u/s 32 or 40(b) etc. because these sections come between 28 and 43C.
To give benefits to Partnership firm, a proviso was added to the section, which reads as follows :
"Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40."
It means expenses u/s 40(b) will be allowed separately from Profits computed u/s 44AD (1) i.e. 8% or 6% as the case may be.
However, now above Proviso to sub-section (2) was omitted by Act No. 28 of 2016 (w.e.f. 1-4-2017).
Therefore, expenses u/s 40(b) is no more separately allowed as sub section 1 of 44AD triggers and overrules 40(b) and hence salary and interest will be deemed to be allowed whenever we opt for 44AD.