ATUL KUMAR GUPTA,DELHI V. ITO, WARD- 43(1), DELHI

ITA 3516/DEL/2025

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The case involves Atul Kumar Gupta, a Chartered Accountant and partner in M/s. A P R A & Associates LLP, who appealed against the order of the Commissioner of Income Tax (Appeals) which disallowed his claim of business expenditures from the salary received as a partner. The Assessing Officer had initially disallowed these claims, stating that professional expenditure is not allowable from the remuneration received by a partner. The Tribunal examined whether the assessee is eligible to claim business expenditure from the salary received from the partnership firm, referencing section 28(v) of the Income Tax Act, 1961, which treats any remuneration received by a partner as business income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781275 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 28-05-2025
• Other Referred Cases: CIT vs. Ramnik Lal Kothari, Anil Gupta vs. ITO, Aman Tandon vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHA GUPTA
• Assessee Lawyers: ANIL SHARMA; CHARTERED ACCOUNTANT
• Keywords: Business income; Business expenditure; Depreciation; Rule of consistency
• Section: 32; 37

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “एस एम सी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.3516/िदʟी/2025 (िन.व. 2018-19) ITA No.3516/DEL/2025 (A.Y. 2018-19) Atul Kumar Gupta, 3812/5, Kanhiaya Nagar, Tri Nagar, Delhi 110035 ...... अपीलाथᱮ/Appellant PAN: AGGPG-9567-J बनाम Vs. Income Tax Officer, Ward-43(1), Delhi ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/Appellant by : Shri Anil Sharma, Chartered Accountant ŮितवादीȪारा/Respondent by : Ms. Sudha Gupta, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 29/07/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 24/10/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 30.03.2025, for Assessment Year 2018-19. 2. Shri Anil Sharma, appearing on behalf of the assessee submitted that the assessee is a Chartered Accountant by profession and is a partner in M/s. A P R A & Associates LLP, Chartered Accountants. During the period relevant to assessment year under appeal, the assessee received remuneration of Rs.24,00,000/- from the aforesaid partnership firm. The assessee claimed expenditure of Rs.6,76,456/- on account of travelling expenses, telephone Printed from counselvise.com 2 ITA No.3516/Del/2025 (AY 2018-19) expenses, depreciation, repair and maintenance, fuel expenses, driver salary, etc. and offered balance salary of Rs.11,62,424/- to tax. The Assessing Officer (AO) disallowed assessee claim of expenditure holding that professional expenditure is not allowable from the remuneration received by the partner. Aggrieved by the assessment order dated 03.03.2021, the assessee carried the issue in appeal before the CIT(A) but remained unsuccessful. Hence, the present appeal. 2.1. The ld. AR of the assessee submitted that the authorities below have erred in not considering the fact that the salary received by a partner of a firm is in the nature of business income. He referred to provisions of section 28(v) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), to contend that any interest salary, bonus, commission or remuneration by whatever name called received by partner from such firm is in the nature of business income. In support of his contention, he placed reliance on the decision of Hon’ble Supreme Court of India in the case of CIT vs. Ramnik Lal Kothari, 74 ITR 57. He further placed reliance on the decision of the Tribunal in the case of Anil Gupta vs. ITO in ITA No. 5645/Del/2023 for AY 2010-11 decided on 31.01.2014 and the decision of Tribunal in the case of Aman Tandon vs. ACIT in ITA No. 3469/Del/2015 for AY 2011-12 decided on 13.12.2019. The ld. AR also referred to the computation of income at page no. 228 to show that the salary received by the assessee from partnership firm has been offered to tax under the head Income from Business and Profession. 3. Per contra, Ms. Sudha Gupta representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. Printed from counselvise.com 3 ITA No.3516/Del/2025 (AY 2018-19) 4. Both sides heard, orders of the authorities below examined. The short issue in the present appeal is; Whether the assessee is eligible to claim business expenditure from salary received by the assessee from partnership firm? 5. The identical has been considered by the Division Bench of the Tribunal in the case of Anil Gupta vs. ITO (supra) wherein the assessee a Chartered Accountant had claimed business expenditure from remuneration received from partnership firm. The AO and the CIT(A) disallowed assessee’s claim of such business expenditure from the salary received from the partnership firm. The Tribunal after considering the facts of the case and the decision of Hon’ble Apex Court in the CIT vs. Ramnik Lal Kothari (supra) allowed assessee’s claim of expenditure. 6. Section 28(v) of the Act, allows any interest salary, bonus, remuneration by whatever name called received by a partner from the partnership firm to be treated as business income. Consequently, any expenditure incurred by the partner exclusively and solely for the purpose of earning such business income is an allowable expenditure u/s. 32 and 37 of the Act. The assessee has been claiming such expenditure from salary received from the partnership firm in the past. The Rule of consistency demands that if the expenditure in the nature of depreciation on motor car, etc. has been allowed to the assessee in the past, the same should be allowable in the subsequent assessment year as well. Thus, in light of the facts and provision of section 28(v) of the Act, I have no hesitation in holding that the expenditure incurred by the assessee wholly and exclusively for the purpose of business and profession is a allowable expenditure. Printed from counselvise.com 4 ITA No.3516/Del/2025 (AY 2018-19) 7. The ld. AR of the assessee submitted that business expenditure from salary was claimed by the other partner of partnership firm for the impugned assessment year. The AO allowed such expenditure in the case of other partner. Taking into consideration entire facts of the case and legal position, appeal of the assessee is allowed. Order pronounced in the open court on Friday the 24th day of October, 2025. Sd/- Sd/- (VIKAS AWASTHY) ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 24/10/2025 NV/- ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "