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2023 (1) TMI 649 - AT - Income TaxExemption from partnership firm u/s 10(2A) - HELD THAT:- On going through the financial statements of the partnership firm, the firm has earned income during the impugned assessment year, which has been divided by both the partners. In the computation of income of the partnership firm, there was no income under the head ‘business and profession’, since the partnership firm was showing loss in the earlier years, which has been brought forwarded and while computing tax of the partnership firm, the same profit has been set off. As per the income-tax Act, there was no distributable profits but in real theory in the impugned assessment year, partnership firm has earned profit. We also gone through the previous year’s financial statements i.e assessment year 2016-17 and 2017-18. In the assessment year 2016-17, the partnership firm has suffered a loss, which has been divided by both the partners equally and the loss has been included in the financial statements and while computing taxable income of the assessee, the same has been added back under the head ‘other additions’, which is evident from the computation of income filed by the assessee as directed by the bench. Assessee has not got any undue benefits. Assessee is eligible to claim exemption as per sec. 10(2A) of the Act on the profit received from the partnership firm. In view of this, the computation of income filed by the assessee is correct. Accordingly, appeal of the assessee is allowed.
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