Following particulars are extracted from the financial statements of Surat Gold and Diamonds limited for the year ended 31st March, 2023: (Unit in Rupees) Salaries and perquisites paid to managing director ₹1,50,000 and

The adjusted net profit as per Section 198 read with Schedule V of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is computed as given below: Unit in Rupees Profit as per P&L A/c: 32,00,000 Add items not deductible: i) Managerial remuneration to MD 1,50,000 ii) Managerial remuneration to WTD 1,20,000 iii) Provision for bonus to directors 10,000 iv) Provision for gratuity to directors 12,000 v) Provision for doubtful debts: 60,000 vi) Provision for income tax: 4,80,000 Sub Total: 8,32,000 Less items deductible a) Profit on sale of forfeited shares (-10,000) b) Short term capital gains (-2,60,000) c) Past accumulated losses (-2,50,000) Subtotal: (-5, 20,000) Therefore, adjusted net profit for managerial remuneration: ₹35, 12,000 Since the company has two whole time directors and three non-executives part time directors, the managerial remuneration payable to- i) MD & WTD: @10% of Adjusted Net Profit: ₹3,51,200 ii) Three non-executive directors@1% of Adjusted Net profit: ₹35,120 Assumptions: In accordance with Section 198 of the Act read with companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014- a. It is assumed that the accumulated past losses have not been deducted yet in computation of adjusted net profit for the purpose of managerial remuneration b. It is assumed that the surcharge of ₹1,20,000 on income tax is a tax in the nature of tax on excess on abnormal profit under section 198(4)(d) c. Contribution to charitable trust is bonafide and within approved limits under section 181 of the Act.