Need clarification-income tax act, 1962

IPCC 296 views 2 replies

Balaji

39 Points Joined January 2015

Can anyone please explain this section 10(2)?

Share income of a person being a partner of a firm (includes Limited Liability Partnerships) which is separately
assessed as such is exempt from tax. For the purposes of this clause, the share of a partner in the total income
of a firm separately assessed as such shall be an amount which bears to the total income of the firm the same
proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to
such profits.

I can understand that partner's share in income in exempted but I can't understand the latter part of the section. Please someone explain this. Thank you..!

Replies (2)

CA Suri Kota

Assistant Manager @ EY

955 Points Joined November 2007

It just says the profits of partners should be distributed in the ratio per the partnership deed.

Thanks

Suri

goutham

Principal at candaforca

60 Points Joined June 2015

Section 10(2) means:

Any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family.