Vivek (Finally passed CA Final...!!!!!) (1097 Points)
11 January 2010Hi all,
We all know that Share of profit from Partnership Firm is exempt from tax under 10(2A).... Now i want to know whether it is before tax or after tax. E.g; Total income of Partnership firm is Rs. 1 lac. Tax @ 30% 30,000. A partner has 10% share... How much income he must show as exempt under section 10(2A) in his ITR return...? Whether 10000 or 7000...?
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 11 January 2010
Vivek..., r u sure of this Q.???
I mean, we get exemption, coz its already taxed buddy... That means, 7000
CA. ANKUR JAIN
(CA.....)
(2800 Points)
Replied 11 January 2010
yup i agreeeeeeeeeee wid dheeraj...................
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 11 January 2010
The simple logic is....
The tax on PARTNERSHIP profit is already deducted.., that means, on remaining amount (that is post tax income to be distributed among partners), partners are not suppose to pay tax (avoidance of double taxation)... and hence it becomes exemtion....
Hence, the amount to be considered is Rs. 70000 for firm (post tax) and 7000 for that partner
Vivek
(Finally passed CA Final...!!!!!)
(1097 Points)
Replied 11 January 2010
Hi Dhiraj,
Let me clear u my question:
Net profit of Firm as per P&L A/c 90,000
Add: Donations (Disallowed) 10,000
---------------
Total Income of Firm 1,00,000
----------------
Income tax @ 30% 30,000
Partner A has 10% share. How much income he must show in his return as exempt u/s 10(2A)...? Most say it is Rs. 10,000...? Do u agree sir...?
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 11 January 2010
Look, i didnt know that u need a detailed answer....
I answered for the net impact., i.e considering the capital account of such partner.... Carry on in every aspect, the net impact of exempted income will be Rs. 7000
Vivek
(Finally passed CA Final...!!!!!)
(1097 Points)
Replied 11 January 2010
Yes... Dhiraj.... Net effect i agree with you.... But what should be shown in ITR...? 7K or 10K...?
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 11 January 2010
Hey, in case of ITR.... its 10K.., not to think anything else
CAclubindia
