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A Partner cannot claim the benefit of section 44AD on interest & remuneration received from firm, holds Madras High Court in
( 2020] 122 taxmann.com 252.
The High Court upon their reference to the provisions of section 28(v), 40b Nd parallel presumptive nature of schemes under section 44AF and 44ADA reached the following conclusion :
“The intention of the legislature also becomes clearer if we look into Section 44AF which is a special provision for computing profits and gains of retail business which is computed based on the total turnover with the previous year on account of such business. Section 44ADA is a special provision for computing profits and gains of profession on a presumptive basis uses the expression ‘Total gross receipts’. As already seen in Section 44AD, the words used are ‘total turnover’ or ‘gross receipts’ and it pre-supposes that it pertains to a sales turnover and no other meaning can be given to the said words and if done so, the purpose of introducing Section 44AD would stand defeated. That apart, the position becomes much clearer if we take note of sub-Section (2) of Section 44AD which states that any deduction allowable under the provision of Section 30 to 38 for the purpose of sub-section (1) be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. Thus, conspicuously section 28(v) has not been included in sub-section (2) of Section 44AD which deals with any interest, salary, bonus, commission or remuneration by whatever name called, due to or received by, a partner of a firm from such firm.
14. Thus, for all the above reasons, we find that the Tribunal rightly rejected the plea raised by the assessee and confirmed the order passed by the CIT(A) and the Assessing Officer.”
By far partner and firm supplement and complement, each other and technicalities should not deprive an individual of beneficial schemes.
Section 44AD define by an explanation who is ‘eligible assessee’ and what is ‘eligible business’ but none of these make any exception to a ‘partner individual’ or ‘incomes/profits derived by partner’, that may be liable in their hands as business incomes be it is remuneration or interest on capital. The decision may lend into a bit of controversy in the days to come for not going strictly with the wording in the section.

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