Atul Kumar Gupta Vs ITO (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi Bench delivered its decision in an appeal filed by a Chartered Accountant challenging the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dated 30 March 2025, for Assessment Year 2018–19. The central issue before the Tribunal was whether a partner in a firm can claim deduction of business-related expenses from the salary or remuneration received from the partnership firm.
The assessee, a partner in M/s A.P.R.A. & Associates LLP, had received ₹24,00,000 as remuneration from the firm. Against this income, he claimed ₹6,76,456 as business expenses incurred towards travel, telephone, depreciation, repairs, fuel, and driver salary, declaring the balance of ₹11,62,424 as taxable income. The Assessing Officer disallowed the claim, holding that such professional expenses were not deductible from remuneration received by a partner. The Commissioner (Appeals) upheld the disallowance, leading the assessee to appeal before the ITAT.
The assessee argued that under Section 28(v) of the Income Tax Act, 1961, any salary, interest, bonus, or commission received by a partner from a firm is treated as “profits and gains of business or profession.” Therefore, any expenditure incurred wholly and exclusively to earn that income should be deductible under Sections 32 and 37 of the Act. Reliance was placed on the Supreme Court’s decision in CIT v. Ramnik Lal Kothari (74 ITR 57) and earlier ITAT rulings in Anil Gupta v. ITO and Aman Tandon v. ACIT, where similar claims were allowed.
