Remuneration to Partner cannot be treated as ‘Expenditure’ for Section 40A(3)

Ratilal & Sons Vs ITO (ITAT Mumbai) For invoking provisions of section 40A(3) of the Act, following conditions need to be cumulatively satisfied:- (i) there should be an expenditure; (ii) expenditure should be in mode other than prescribed by the section; and (iii) amount of expenditure should be more than Rs. 20,000. As stated in the earlier portion of this order, the remuneration paid to partner is share of profit of the firm and it retains the same character in the hands of the partner and taxable as such. It is not in the nature of salary paid by the employer to an employee, deduction ...