Sh. Ranu Gupta Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, allowed the assessee’s appeal for Assessment Year 2018-19 against the order of the CIT(A)/NFAC arising from assessment proceedings under Section 143(3) of the Income Tax Act, 1961.
The assessee, a Chartered Accountant and partner in M/s SARC and Associates, received remuneration of ₹27,00,000 from the partnership firm and offered 50% of the amount to tax under the presumptive taxation scheme contained in Section 44ADA. The Assessing Officer rejected the claim, holding that the remuneration was received as a working partner and not by an individual carrying on a specified profession under Section 44AA(1). Referring to Section 28(v), Section 40(b) and CBDT Circular No. 3 of 2017 dated 20.10.2017, the Assessing Officer concluded that partner’s remuneration could not be treated as gross receipts of a profession for the purposes of Section 44ADA. The Assessing Officer also noted that the assessee had offered the entire remuneration as business income in earlier assessment years without claiming Section 44ADA.
The CIT(A) affirmed the assessment order. While distinguishing the decisions relied upon by the assessee, the CIT(A) relied upon the decision in Shri A. Anand Kumar, as affirmed by the Madras High Court, and held that remuneration received by a partner from a firm is distinct from income earned by carrying on an individual profession and, therefore, Section 44ADA was not applicable.
