Partner's personal expenditure for earning partnership share income is deductible when wholly and exclusively incurred for that purpose.

A partner may claim, in his individual assessment, deduction for salary paid to a person engaged to protect or advance his interests in the firm, if the expenditure was incurred wholly and exclusively for earning his share income. The person engaged must be shown to have served the partner personally, not the firm, and to have been remunerated by the partner himself. On that basis, the expenditure was held deductible against partnership share income, following the settled view that such personal outlay is allowable where it is directly connected with earning the assessable income.

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Issues: Whether a partner, in his individual assessment, can claim deduction under section 10(2)(xv) of the Income-tax Act, 1922 in respect of salary paid to a person engaged to look after his interests in the firm, against his share income from the partnership.

Analysis: The share income of a partner is assessable in his individual assessment, and expenditure incurred wholly and exclusively for earning that share income is allowable if it is shown to have been incurred by the partner himself. The record showed that the person engaged was not employed by the firm but was rendering services only to the assessee and was remunerated by him. The question whether such deduction is permissible against partnership share income had already been answered in the affirmative, and that view had been approved by the Supreme Court.

Conclusion: The deduction was allowable and the question was answered in the affirmative, in favour of the assessee and against the revenue.

Ratio Decidendi: Expenditure personally incurred by a partner for earning his share of partnership income is deductible in his individual assessment if it is wholly and exclusively laid out for that purpose.

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