The appeal before the ITAT Delhi (SMC Bench) in the case of Sh. Ranu Gupta vs ACIT, National e-Assessment Centre, Delhi for AY 2018-19 concerns the applicability of Section 44ADA to remuneration received by a Chartered Accountant acting as a working partner in a partnership firm. The Assessing Officer denied the assessee’s claim under Section 44ADA on the ground that the remuneration received from the firm does not constitute gross professional receipts derived from practicing the profession in an individual capacity, but is only income received as a working partner. The AO relied upon CBDT Circular No. 3/2017 and judicial precedents including A. Anand Kumar (Madras HC) to conclude that partner’s remuneration cannot be treated as professional gross receipts for the purposes of presumptive taxation.

The CIT(A) upheld the AO’s view, holding that remuneration paid to a working partner is distinct from income earned by an individual carrying out professional activity on their own, and hence 44ADA is not applicable. It was further held that although the assessee is a Chartered Accountant holding a certificate of practice, such status does not automatically qualify the partner’s remuneration as professional receipts for presumptive taxation.

Before the Tribunal, the Department argued that the assessee neither claimed expenditure nor performed professional activity independently and therefore is not eligible for Section 44ADA. The Tribunal rejected this argument, observing that Section 44ADA does not impose a statutory precondition for claiming expenditure nor require independent professional practice separate from partnership activity. Applying the principle of strict interpretation as laid down in Commissioner vs Dilip Kumar (SC), the Tribunal directed that the assessee be assessed under Section 44ADA.

The appeal was accordingly allowed
in favour of the assessee.

Link to download the order
https://mytaxexpert.co.in/uploads/1766726862_1766399585399.pdf