Partners’ Expenses Incurred For Business Purposes Are Deductible Under Income Tax: ITAT Grants Relief To Former ICAI President Atul Gupta

The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that business-related expenses incurred by a partner for earning remuneration from the firm are deductible. In the case of former ICAI President Atul Gupta, the Tribunal agreed that his “salary” or remuneration from the partnership firm constituted business income (under Section 28(v) of the Income Tax Act) rather than salary income, allowing him to deduct expenses like travel, fuel, telephone, depreciation, driver salary based on their direct connection to his business activity. The ITAT relied on precedent (e.g., Ramniklal Kothari) and held that the partner’s remuneration is not compensation in the employment sense but profits of business / profession, thus upholding fundamental tax principles around consistent treatment and allowable business deductions. (Taxscan)