Partner can claim expenses against Remuneration from partnership firm – ITAT rules in favour of Former ICAI President Atul Gupta.
Most people think you pay tax on 100% of your partner remuneration. But a recent ITAT ruling proves otherwise.Here’s how Former ICAI President Atul Gupta successfully reduced his taxable income by ₹6.76 lakh and won against the tax department
Let us have a Short Overview of the Case: –
[1] Case Background
• Mr. Atul Gupta, a Chartered Accountant & partner in a CA firm
• Received ₹24,00,000 as partner remuneration for AY 2018–19
• Claimed ₹6,76,456 as business expenses — travel, mobile, car running, fuel, depreciation, driver salary, etc.
[2] AO’s Stand (Disallowance)
The Assessing Officer:
Disallowed 100% of the expenses claimed
Treated the full ₹24 lakh as taxable
Argued that no deductions are allowable from partner remuneration
[3] What the Law Actually Says
Partner remuneration is Business Income, not Salary.
Under business income, all legitimate business expenses are allowable
Supported by Supreme Court ruling: CIT vs Ramniklal Kothari
[4] ITAT’s Findings
The Delhi Tribunal observed:
Income has always been offered under Business Head
Similar expenses were allowed by the department in earlier years
Rule of Consistency applies — you cannot disallow suddenly without a reason
Expenses were wholly & exclusively for professional purposes
[5] Final Verdict (Big Win!)
ITAT held that:
Car expenses
Depreciation
Fuel
Travel
Driver salary
all are directly linked to earning partnership income and hence fully allowable.
Case Law: Atul Kumar Gupta vs ITO, ITAT Delhi
Order Date: 24 October 2025
AY: 2018–19
Key takeaway:
Partners in firms can claim genuine business expenses against partner remuneration – backed by law and judicial precedent.
The copy of the order is as under:
