Presumptive Taxation Allowed as Partner’s Remuneration Is Professional Income: ITAT Delhi

Ranu Gupta Vs ACIT (ITAT Delhi)

RANU GUPTA V. ACIT (ITAT DELHI): APPLICABILITY OF SECTION 44ADA ON PARTNER’S REMUNERATION

Facts

• The assessee, a Chartered Accountant, was a partner in M/s SARC and Associates.
• He received ₹27,00,000 as partner’s remuneration.
• He opted for Section 44ADA and offered 50% of the receipts to tax.
• The AO and CIT(A) disallowed the claim, holding that:
  • Partner’s remuneration is not “gross receipts” from profession.
  • Section 44ADA applies only to independent professional practice.

Issue

Whether remuneration received by a professional partner from a partnership firm qualifies as gross receipts eligible for presumptive taxation under Section 44ADA.

Decision (ITAT Delhi)

The ITAT allowed the assessee’s claim and held that:

• Section 44ADA does not mandate independent practice.
• The only statutory condition is that the assessee:
  • Is an individual, and
  • Is engaged in a specified profession under Section 44AA(1).
• Remuneration received as a partner for professional services rendered is professional income.

Therefore, such receipts qualify as gross receipts for the purpose of Section 44ADA.The statute nowhere restricts the applicability of Section 44ADA to professionals practicing in an individual capacity only.

1. Presumptive Taxation for Professional Partners

Professionals such as CAs, advocates, doctors, architects, engineers, etc., can opt for Section 44ADA on partner’s remuneration, subject to turnover limits.