PQR & Co. is a partnership firm consisting of 4 partners. The firm did a turnover of ₹305 lakh and derived Net Profit (as per Profit and Loss Account) of ₹15,20,000 before adjustment of the following: (i) Working par

Computation of Total Income of the Firm Particulars Amounts (₹) Net Profit as per Profit and Loss account 15,20,000 Less: Rent Payable to partner (Even though not authorized by the deed, it is deductible. There is no requirement that payment of rent need to be mentioned in the deed). [₹10,000*12] (1,20,000) Less: Interest on Capital @ 12% p.a. on ₹40 lakhs (4,80,000) Book Profit 9,20,000 Working Partner Salary as per deed ₹50,000 * 2 * 12 = 12,00,000 Allowable working partner salary u/s 40(b) On first 3,00,000 @ 90% = 2,70,000 On the balance of ₹6,20,000 * 60% = 3,72,000 Total Salary = ₹6,42,000 (2,70,000 + 3,72,000) Least of the above is deductible (6,42,000) Income of the Firm 2,78,000