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2021 (4) TMI 1351 - AT - Income TaxUndisclosed income - share of profit credited in the partner’s capital account - Eligibility of exemption under section 10(2A) - HELD THAT:- The firm in which the assessees are partners have provided for the depreciation in the books which are less than that of the depreciation allowable under section 32 of the Act. Further, by filing copy of the CBDT Circular No. 8/2014 dated 31.03.2014, assessee has submitted that the share of profit credited in the partner’s capital account shall be considered for exemption under section 10(2A) of the Act, in the individual hands of the partners, even if the taxable 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 by the assessee are allowed.
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