07-09-2009, 04:13 PM
Dear,
Please Note the following;
<b>Accounting Profit</b>
profit before depreciation and salary -------------Rs. 9,000,000
Director's salary -----------125k * 12-------------Rs.-1,500,000
Accounting Depreciation ------Assumed Figure-------Rs.-1,000,000
Accounting Profit----------------------------------Rs. 6,500,000
<b>Taxable Profit</b>
profit before depreciation and salary -------------Rs. 9,000,000
Director's salary -----------125k * 12-------------Rs.-1,500,000
Tax Depreciation ---------Assumed Figure ----------Rs.-2,000,000
Taxable Profit-------------------------------------Rs. 5,500,000
<b>Taxable Profit of Director</b>
Basic Salary -------------------------------------Rs. 1,500,000
Furnished Accommodation * ------1500000 * 45%----- Rs. 675,000
Director's Taxable Profit--------------------------Rs. 2,175,000
<b>Assumptions and Justifications</b>
Depreciation is assumed figure i.e. rates overlooked.
All those facilities, which are being provided to the director will not effect company's income i.e. if facilities were provided proportionaly (i.e. 50% each to director and Visitors) this would not have effected the company's profit, in each case, company will only charge depreciation as an expense to arrive at its profit.
Visitors come for very few days, hence negligible, had visitors come for 3 month or 6 month in a year then this would have effected the taxable income of director, Proportionate figure of accommodation would have been allocated to the director's income. In either case, Company's taxable profit would have been same, as calculated.
* Higher of annual value of FMR or 45% of MTS or BS, Since, FMR of accommodation is missing , 45% of BS will be included in taxable income as specified u/s 13(12)
Queries will be appreciated.
Best Regards,
Please Note the following;
<b>Accounting Profit</b>
profit before depreciation and salary -------------Rs. 9,000,000
Director's salary -----------125k * 12-------------Rs.-1,500,000
Accounting Depreciation ------Assumed Figure-------Rs.-1,000,000
Accounting Profit----------------------------------Rs. 6,500,000
<b>Taxable Profit</b>
profit before depreciation and salary -------------Rs. 9,000,000
Director's salary -----------125k * 12-------------Rs.-1,500,000
Tax Depreciation ---------Assumed Figure ----------Rs.-2,000,000
Taxable Profit-------------------------------------Rs. 5,500,000
<b>Taxable Profit of Director</b>
Basic Salary -------------------------------------Rs. 1,500,000
Furnished Accommodation * ------1500000 * 45%----- Rs. 675,000
Director's Taxable Profit--------------------------Rs. 2,175,000
<b>Assumptions and Justifications</b>
Depreciation is assumed figure i.e. rates overlooked.
All those facilities, which are being provided to the director will not effect company's income i.e. if facilities were provided proportionaly (i.e. 50% each to director and Visitors) this would not have effected the company's profit, in each case, company will only charge depreciation as an expense to arrive at its profit.
Visitors come for very few days, hence negligible, had visitors come for 3 month or 6 month in a year then this would have effected the taxable income of director, Proportionate figure of accommodation would have been allocated to the director's income. In either case, Company's taxable profit would have been same, as calculated.
* Higher of annual value of FMR or 45% of MTS or BS, Since, FMR of accommodation is missing , 45% of BS will be included in taxable income as specified u/s 13(12)
Queries will be appreciated.
Best Regards,
