TMI Blog2021 (4) TMI 1351X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the firm is NIL in the hands of the firm and prayed for deleting the addition made in both the assessees case. Vide circular No.8 of 2014, dated 31.03.2014, the CBDT has reemphasized the interpretation of Provisions of section 10(2A) of the Act in cases where income of the firm is exempt. We find merit in the contention of the ld. Counsel for the assessee. The CBDT itself has accepted the proposition that the share income from the firm received by the partners is exempt under section 10(2A) of the Act and under no circumstances can be taxed in the hands of the partners. In view thereof, we set aside the orders of the ld. CIT(A) and delete the addition in the hands of both the assessees as undisclosed income. Appeals filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee, the Assessing Officer concluded the assessment that the assessees are eligible for exemption under section 10(2A) of the Act only for an amount of ₹.65,67,055/- against the claim of ₹.73,93,586/- which was credited into the current account of the firm and accordingly, the difference of ₹.8,26,531/- was assessed as income from other sources and brought to tax in respect of both the assessees. On appeal, the ld. CIT(A) confirmed the assessment. 3. On being aggrieved, both the assessees are in appeal before the Tribunal. 4. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the assessment order, the Assessing Officer came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. It is more of a book entry as no cash was generally drawn out of the firm. It was further observed that the excess claim of exemption of ₹.8,26,531/- under section 10(2A) of the Act gives an opportunity to the assessees to increase, the personal capital, without any declaration of income without suffering taxation. The personal balance sheet of the assessee would reflect a balance of ₹.4,45,42,733/- instead of ₹.4,37,16,202/-. 5. Before us, while reiterating the submissions as made before the authorities below, the ld. Counsel for the assessee has submitted that the variation between the book profit and taxable profit of the firm arises only because of the difference between book depreciation and allowable deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits ; 7. Vide circular No.8 of 2014, dated 31.03.2014, the CBDT has reemphasized the interpretation of Provisions of section 10(2A) of the Act in cases where income of the firm is exempt and the same reads as under: A reference has been received in the Board in connection with the interpretation of provisions of section 10(2A) of the Income tax Act, 1961 ( Act ) seeking clarification as to what will be the amount exempt in the hands of the partners of a partnership firm in cases where the firm has claimed exemption/deduction under Chapter III or VI A of the Act. 2. The matter has been examined. Sub section (2A) of section 10 was inserted by the Finance Act, 1992 w.e.f. 1-4-1993 due to a change in the scheme of taxation of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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