Case Law Details
Ajay Verma Vs ITO (ITAT Lucknow)
Asessing Officer made the additions on account of 50% share of profit and partner’s salary as the Assessing Officer has held that no ITR/balance sheet/P&L account of Partnership Firm was filed to substantiate the claim. Before CIT(A) assessee filed detailed ITR of the firm and also filed the copy of partnership deed wherein the remuneration was mentioned in the partnership deed. It was also submitted that firm had paid tax as per the law on the profit and distributed the remaining profits to partners as per the provisions of partnership deed and also it was submitted that share of profit received from the firm is exempt u/s. 10(2A) of the Act.
CIT(A) accepted the claim of the assessee regarding partner’s salary of Rs.3,60,000/- but upheld the addition on account of share of profit from the above firm by holding that assessee had not disclosed such share in his income tax return.
ITAT find that the share of profit from a partnership firm is specifically exempt under the provisions of Section 10(2A) of the Act and the undisputed fact is that such share was received from the partnership firm in which the assessee was a partner. The assessee had filed with the ld. CIT(A), copy of partnership deed as well as detailed copy of the ITR of the firm, wherein the assessee was a partner and from where he had received the share of profit. Therefore, in view of above facts and circumstances of the case addition for share of profit from a partnership firm cannot be taxed.
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