Recently, in DCIT v. M/s. Bakeri Construction Pvt Ltd, the Income Tax Appellate Tribunal (ITAT) Ahmedabad held that share income from the firm received by the partners is not taxable from the hands of the assessee under the provisions of the Income Tax Act.
The assessee-company, a partner in the firm M/s. Parasar Developers whose income was exempt under section 80IB of the Income Tax Act received income from the firm and exempt from tax under section 10(2A) of the Income Tax Act. The Assessing Officer completed the assessment by holding that the income from the firm was taxable. The assessee contended that as per the CBDT Circular No.636 dated 31st August, 1992, the share income is not taxable from the hands of the assessee.
Dismissing the Revenue’s appeal the bench noted that “the CBDT itself has accepted the proposition that the income from the firm received by the partners is exempt under section 10(2A) of the Income Tax Act and under no circumstances can be taxed in the hands of the partners.”
Read the full text of the order below.
