From the profit and loss account of Mishra Traders, a partnership firm, for the year ending 31st March 2023, compute the taxable income and tax liability for the assessment year 2023-24:

Profit and Loss Account

| Description | Amount | Description | Amount |
|--------------------------------|-----------|----------------------------|-----------|
| To Salaries | ₹36,000 | By Gross Profit | ₹96,000 |
| Rent | ₹12,000 | Commission | ₹5,000 |
| Electricity and Water | ₹2,200 | Scrap Sales | ₹5,000 |
| Rent, Rates and Taxes | ₹2,500 | Refunds Received on Excise Penalty | ₹2,500 |
| Motor Car Expenses | ₹9,000 | Income-tax refund | ₹7,700 |
| Entertainment Expenses | ₹3,000 | Surplus on Sale of Plot | ₹15,000 |
| Repairs | ₹6,000 | | |
| Depreciation | ₹8,000 | | |
| Trade Expenses | ₹6,500 | | |
| Legal Expenses | ₹4,100 | | |
| Net Profit | ₹41,900 | | |
| Total | ₹1,31,200 | Total | ₹1,31,200 |

Other Particulars:

1. Salaries include ₹12,000 paid to managing partner X.
2. Rent includes ₹6,000 paid to a partner for the premises occupied by the firm.
3. Rent, rates, and taxes include municipal taxes of ₹1,000 paid on the premises of the partner, to be borne by him.
4. Motor car expenses include ₹3,600 conveyance allowance paid to the managing partner, claimed to be spent entirely on duties.
5. Repairs represent the cost of two electric motors replaced at a cost of ₹3,000 each.
6. Trade Expenses include:
- Donation to approved Charitable Institution: ₹1,500
- Diwali Pooja Expenses: ₹1,000
7. Legal Expenses include ₹500 paid to an advocate for litigation concerning the partner's property.
8. Excise penalty was disallowed when debited in the earlier year, i.e., assessment year 2022-23.
9. The plot was held by the firm for more than 36 months.
10. The firm has submitted its instrument of partnership, which provides for the salary and allowance paid to managing partner X.

To compute the taxable income and tax liability for Mishra Traders, we need to make specific adjustments to the net profit as per accounting rules and taxation laws. Let's break it down step by step:

Net Profit as per P&L Account: ₹41,900
Add: Expenses disallowed under tax laws
- Managing Partner's Salary: ₹12,000 (Salaries to partners are generally added back unless specified conditions are met)
- Rent paid to Partner: ₹6,000 (For personal use of partner-premises)
- Municipal Taxes borne by partner: ₹1,000
- Legal Expenses for partner's property: ₹500
- Diwali Pooja Expenses: ₹1,000 (Personal in nature)
- Donations: ₹1,500 (Only certain deductions allowed under specific rules and often need specific allowances different from actual expenditure listed)
- Excise Penalty Refund: ₹2,500 (Previously disallowed, now back as income)
Total Disallowances: ₹24,500
Add: Business Income not credited to P&L Account
- Income-Tax Refund: Considered a tax-related item, not usually a business income.
Total Adjusted Profits:
Adjusted Profit = Net Profit + Disallowances
[tex]41,900 + 24,500 = 66,400[/tex]
Thus, the taxable income is ₹66,400.
Tax Calculation: To compute the exact tax liability, you would apply the prevailing tax rate for partnership firms for the assessment year 2023-24, which would typically include specific percentages of tax based on slabs or thresholds, depending on regional laws.

This structured adjustment helps to ensure only business-related, allowable expenses impact the earning and that income and profits are correctly calculated for tax purposes.