Kaushik (Accounts) (123 Points)
03 December 2015I am having an Partnership firm cultivating Sugarcane and selling to industry. The firm has no other income. The land is owned by partner's. There is no other manufacturing or processing activity. Only agriculture farming
Will the income earn by partnership firm on selling of sugarcane exempt from Income Tax ?
CA Goutam Sharma
(Chartered Accountant in Practice)
(468 Points)
Replied 03 December 2015
Yes, its exepmt...
CA Neha Gupta
(Managing Partner LNG & Associates)
(1839 Points)
Replied 03 December 2015
Kaushik
(Accounts)
(123 Points)
Replied 03 December 2015
Thanx. Under which section and where it has been mentioned. Can you give reference to any case ?
ashutosh kumar
(student)
(72 Points)
Replied 03 December 2015
Aditya
(Article)
(54 Points)
Replied 03 December 2015
ashish
(article)
(151 Points)
Replied 03 December 2015
Raival Sharma
(student)
(28 Points)
Replied 04 December 2015
Agriculture income is exempt U/S 10(1), OF incometax act 1961.
Kaushik
(Accounts)
(123 Points)
Replied 04 December 2015
There is no sale or lease or rent of land. The land is owned by individual. The partnership firm is doing farming and the profit is distributed to partner in sharing ratio
1) Under section 10(1), is even partnership firm exempt from income on agriculture ? IF so, any case / order / any reference as sepifically the word partnership is not mentioned in 10(1)
2) if the above is yes, Is the partnership firm also exempt form filing return ? Note: The firm has no other income
Kindly guide
Aditya
(Article)
(54 Points)
Replied 04 December 2015
CA Goutam Sharma
(Chartered Accountant in Practice)
(468 Points)
Replied 04 December 2015
The Case shall be considered as follow
1 The Agricultural Land is owned by Individuals
2 The Agricultural Activities are carried on by Partnership Firm
3 The Land is sold
Dear All
A Partnership firm has been separately recognised in Income Tax Act. Any income arising to partnership , shall be taxed in the hands of Partnership only. Out of the net Income of Partnership Firm, Partners Share is exempt from tax to the extent it has already been taxed in the hands of Firm.However , as the Firm is carrying on Agricultural Activities , the income of Firm is Exempt in the hands of firm. At the same time, share of profit from firm in the hands of Partners is also exempt, no matter whether it is Agricultural or not.
Secondly, Sale of Agricultural Land is not considered as transfer of an asset, so there is no question of Capital gains or Exemption under 54 or anything else.
Kaushik
(Accounts)
(123 Points)
Replied 05 December 2015
PLEASE NOTE: There is nothing to do with land. No were I have mentioned that the land is sold. THE LAND IS NOT SOLD, NOR LEASED, NOR RENTED by Partner to the Firm
Can anyone give refrence of case law stating that the Partnership Firm Income from Agriculture is not taxable ?
barkha maheshwari
(practice)
(21 Points)
Replied 10 June 2016
expert sir,
how the income from agriculture based partnership firm treated in the hands of partner
CA Goutam Sharma
(Chartered Accountant in Practice)
(468 Points)
Replied 20 September 2016
Agricultural income is altogether exempt from Income tax and even not includible in the hands of the assessee. Agricultural income in the hands of Partnership firm is exempt in the hands of the firm. It shall also be exempt in the hands of partners.
It is noteworthy to differentiate between Deduction and Exemption.As a basic principle, the expenses for which one party claims deduction, the same is included in the hands of Other as Income. However, Section is not about deduction. It is about altogether Exemption from Incoem Tax. The Incomes which are not includible in total Income.
Therefore, an Income Exempt from Income Tax, under section 10, shall be exempt in the Hands of Firm as well as Partners.
laxansh
(artical)
(23 Points)
Replied 01 May 2017
in the above case if Operation is carried out with Joint Agriculture Farming Agreement (Contract Farming) where as the land owner has to maintain routing agriculture with expert advise and all material like seed,pesticides,fertiliser are provided by the Partnership firm also Agronomist visit by the company on routin schedule done.also marketing and transportation facility arranged by the partnership firm.
will partnership firm get benifit of exemption from share of sale of produced.
CAclubindia
