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2020 (10) TMI 1237 - AT - Income TaxDisallowance of expenditure not exclusively for business - remuneration received from partnership firm - HELD THAT:- We find that there is no reason that the expenditure cannot be allowed to a partner whose income is taxed on account of remuneration and interest received from the firm u/s 28(v) of the Act as business income. The only criteria for allowance of the expenditure are that expenditure should have been incurred by the assessee wholly and exclusively for the purpose of the business. In the present case the assessee has given details of expenditure such as salary expenditure of driver, communication expenditure, insurance and depreciation on the vehicle. Out of the above expenditure the assessee himself has disallowed part of personal expenditure and disallowance u/s 14A of the Act. The lower authorities could not say that in all these expenditure has not been incurred by the assessee wholly and exclusively for the purpose of his business. The allegation of the ld AO was that the expenses incurred by the assessee does not have any nexus with remuneration earned does not have any legal backing. He does not say that these expenditure are not incurred by the assessee for the purpose of the business. Naturally when the income is taxed as remuneration from firm as business income, any expenditure incurred to earn that income is an allowable business expenditure, if it satisfy the relevant criteria. It is not the case of the lower authorities that whole of the expenses incurred by the assessee were not incurred wholly and exclusively for the purposes of the business i.e. to earn remuneration from partnership firm. Therefore, disallowance made by the ld AO and confirmed by the ld CIT(A) cannot be sustained. In view of the fact that the assessee himself has disallowed personal expenditure and u/s 14 A - we direct the ld AO to delete the disallowance of expenditure - Decided in favour of assessee.
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