Calculation of Business Income of Partners Mehvish Kashish (1) Salary from firm to the extent deduction is allowed to firm (2) Interest on capital (to the extent deduction is allowed to firm) (3) Share of profit from firm Business Income 1,44,000 30,000 Exempt 1,74,000 1,20,000 24,000 Exempt 1,44,000 722 ILLUSTRATION 10 Pankaj and Sanjna are working patners in a professional firm of Chartered Accountants. The firm is assessed u/s 184 of Income Tax Act. PROFIT AND LOSS A/C for the year ending 31-3-2015 General expenses 28,00,000 Professional receipts 75,00,000 Salaries to staff 5,00,000 Refund of service tax 2,00,000 Salary to Pankaj 15,00,000 STCG on shares u/s 111A 2,00.000 Salary to Sanjna 10,00,000 Rent of house property 6,00,000 Interest on capital @ 16% p.a. Pankaj 18,000 Sanjna 15,000 33,000 Service tax paid 2,00,000 Donation to Red Cross Society (Notified u/s 80G) 77,000 Net Profit c/d 23,90,000 85,00,000 85,00,000 Additional Informations : (1) General expenses include expenses of 2,00,000 on installing camera security system with LCD. (2) Service tax of 20,000 was paid on 30-11-2015. Due due of filing return of income 30-9-2015. (3) Sanjna withdrew * 1,40,000 on 1-10-2014 from firm for purchasing a Nano car for her personal use. (4) Salary and interest to partners have been paid as per deed. (5) Deed also requires partners to pay interest @ 10% p.a. on drawings made by them, if any. Calculate : (a) Total income and Tax Liability of firm. (b) Business Income of partners