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Can an individual claim expenses out of partner salary received from firm

Kamal Verma (Financial advisor) (588 Points)

08 November 2024

Dear Experts,

Can an individual claim salary paid to staff for assisting in earning remuneration from partnership in preparing income tax return? Is it allowable expenditure? Kindly help.

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (6413 Points)
Replied 08 November 2024

Yes, an individual can claim salary paid to staff for assisting in earning remuneration from a partnership in preparing an income tax return as an allowable expenditure.

According to the Income Tax Act, any expenditure incurred solely for the purpose of earning income from a business or profession is allowable as a deduction.

This includes salaries paid to employees who are involved in the preparation of income tax returns, as long as the expenditure is reasonable and properly documented.

However, it's important to note that the salary paid to staff must be reasonable and proportionate to the work performed.

Additionally, the staff member's role and responsibilities should be clearly defined, and their salary should be properly documented through payslips, contracts, or other relevant records.

To claim this expenditure, the individual should maintain proper records, including: - Payslips and salary records - Employment contracts or agreements - Records of work performed by the staff member -

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (6413 Points)
Replied 08 November 2024

Yes, an individual can claim salary paid to staff for assisting in earning remuneration from a partnership in preparing an income tax return as an allowable expenditure.

According to the Income Tax Act, any expenditure incurred solely for the purpose of earning income from a business or profession is allowable as a deduction.

This includes salaries paid to employees who are involved in the preparation of income tax returns, as long as the expenditure is reasonable and properly documented.

However, it's important to note that the salary paid to staff must be reasonable and proportionate to the work performed.

Additionally, the staff member's role and responsibilities should be clearly defined, and their salary should be properly documented through payslips, contracts, or other relevant records.

To claim this expenditure, the individual should maintain proper records, including: - Payslips and salary records - Employment contracts or agreements - Records of work performed by the staff member -

Kamal Verma (Financial advisor) (588 Points)
Replied 08 November 2024

Sir,

Is there any case law ? If yes please share.

Nikhil Kaushik (Fellow CA) (86102 Points)
Replied 12 November 2024

I am not sure if you can see my previous response. Please check Supreme Court judgment in the case of Ramlik Kothari and ITAT judgment in Aman Tandon vs ACIT.

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