Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Assessee, partner in firm of chartered accountants, claimed part of expenditure on dwelling house and car as expenditure incurred for purpose of earning his income - Whether said expenditure allowable against share income - Held, yes FACTS The assessee, a partner in a firm of chartered accountants, earned an amount of Rs. 62,384 from the firm during the assessment year 1971-72.He claimed deduction of Rs. 700 for use of part of dwelling house, and Rs. 2,400 out of part of car expenses, under section 37(1) as having been incurred for the purpose of earning his share income from the above firm. The ITO disallowed claims without assigning any reason. The AAC upheld the claim of the assessee since the ITO had not disputed that the said expenditure was incurred for business purposes. The Tribunal, following its decision in the similar case of two other partners of the same firm upheld the assessee's claim. On reference: HELD It is well settled that when the income is allocated to the different partners of the firm, then the partners are entitled to have their income assessed in accordance with law, that is to say, under section 28(i). In making that assessment, a partner of the firm, being an assessee, is entitled to all the deductions allowable under the Act. In order to earn the income as a partner of the firm, a partner had to do some work and he had to incur certain expenses. For instance, an example was given in this case of holding consultation for the work of the firm at one's residence or of acts done in order to facilitate or earn the income as a partner of the firm. In that view of the matter, the assessee was entitled to deductions under the Act including the car allowance as well as the allowance for the residence. These amounts were based on the estimates and the estimates have not been challenged. Accordingly, the assessee was entitled to the deduction of expenditure claimed by him. CASE REVIEW CIT v. Ramniklal Kothari [1969] 74 ITR 57 (SC), Matubai Chunilal Patel v. CIT [1967] 66 ITR 408 (Guj.), CIT v. Jabarmal Dugar [1972] 84 ITR 158 (Raj.), Phiroze H. Kudianavala v. CIT [1978] 113 ITR…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492