Hemant Kumar Agrawal Vs ITO (ITAT Mumbai)
Partner’s Remuneration: No Flat 50% Relief, But Actual Expenses Allowed
₹18 Lakh Remuneration, ₹9 Lakh Offered to Tax
The assessee was a practising Chartered Accountant working as an associate full-time partner in Jayesh Sanghrajka & Co. LLP. During the relevant year, he received ₹18 lakh as remuneration from the LLP.
He disclosed the remuneration as gross receipts from business or profession and applied section 44ADA, offering ₹9 lakh, being 50% of the receipts, as presumptive professional income.
The Assessing Officer rejected this treatment. According to the AO, the professional practice was carried on by the LLP, while the partners collectively performed the work allotted to them. The remuneration received by a partner could not be treated as the partner’s own professional turnover or gross receipts for section 44ADA.
Accordingly, the AO added the remaining ₹9 lakh to the assessee’s income. The CIT(A) confirmed the addition.
Assessee’s Argument: Professional Work Does Not Lose Its Character
Before the Tribunal, the assessee emphasised that he held a Certificate of Practice and performed professional assignments, including statutory audits and attest functions.
His central argument was that section 44ADA refers to “gross receipts”, without prescribing that professional services must be rendered independently or directly to outside clients. The remuneration was earned because of his professional qualifications and work and should therefore retain the character of professional receipts.
