KOTHARI FEEDS LLP,PUNE vs. C 1 RANGE 56 CIRCLE 5, PUNE, PUNE

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ITA 326/PUN/2025Status: DisposedITAT Pune20 June 2025AY 2020-21Bench: SHRI MANISH BORAD (Accountant Member)1 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the LLP was a registered partner in the partnership firm and the income had already suffered tax at the firm level, the exemption under section 10(2A) should be allowed for the share of profits distributed to the LLP.

What were the facts?

The assessee, a Limited Liability Partnership (LLP), claimed exemption under section 10(2A) for profit share from another partnership firm, M/s. Kothari Autolines. The CPC denied this exemption, and the CIT(A) upheld the denial.

What were the issues?

Whether an LLP, as a partner in a partnership firm, is eligible for exemption under section 10(2A) on profit distribution when the income has already been taxed at the firm level.

Which sections of the Income-tax Act were involved?

Section 10(2A),Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI MANISH BORAD

For Appellant: Shri Nikhil Pathak
For Respondent: Shri S. Sadananda Singh
Hearing: 18.06.2025Pronounced: 20.06.2025

Assessment Year : 2020-21 Kothari Feeds LLP, Vs. ADIT, CPC, Bengaluru. Summet Plaza, E-30/31, Gultekdi, Market Yard, Pune- 411037. PAN : AATFK1257C Appellant Respondent Assessee by : Shri Nikhil Pathak Revenue by : Shri S. Sadananda Singh Date of hearing : 18.06.2025 Date of pronouncement : 20.06.2025 आदेश / ORDER

PER MANISH BORAD, AM:

1.

This appeal filed at the instance of assessee is directed against the order of Ld. Addl./JCIT(A), Udaipur [‘Ld. CIT(A)’] dated 11.12.2024 which is arising out of the intimation u/s 143(1) of the Act for Assessment Year 2020-21 framed on 25.11.2021 by the ADIT, CPC, Bengaluru.

2. The only issue raised in this appeal is regarding denial of exemption u/s 10(2A) of the Act for the share of profit received from partnership firm, M/s. Kothari Autolines.

3.

Brief facts of the case are that the assessee is a Limited Liability Partnership (LLP) and is a partner in another partnership firm M/s. Kothari Autolines and in the return of income filed on 28.11.2020 for A.Y. 2020-21 exempt income at Rs.2,42,710/- claimed u/s 10(2A) of the Act. The CPC denied the said exemption against which the assessee preferred an appeal before Ld. CIT(A) but failed to succeed. Now, the assessee is in appeal before this Tribunal.

4.

Ld. Counsel for the assessee raised two folds arguments firstly, the adjustments made by the CPC is not in accordance with section 143(1) of the Act and secondly, the assessee LLP is eligible for exemption u/s 10(2A) of the Act being partner in another partnership firm. Further Ld. Counsel for the assessee relied on the decision of Co-ordinate Bench, Bangalore in the case of Mulberry Textiles LLP vs. ITO [2023] 147 taxmann.com 267.

5.

On the other hand, Ld. Departmental Representative supported the orders of both the lower authorities.

6. I have heard rival contentions and perused the records placed before me. The grievance of the assessee is that Ld. CIT(A) erred in confirming the action of the CPC by not allowing the exemption u/s 10(2A) for the share of profit of Rs.2,42,710/- received from the partnership firm, M/s. Kothari Autolines. Ld. CIT(A) has denied the exemption stating that a LLP cannot become a partner in partnership firm. I however notice that assessee a LLP has been allowed to become a partner in a partnership firm by the Registrar of firm who has registered the partnership firm. Before me, the limited issue is regarding exemption u/s 10(2A). It is not in dispute that M/s. Kothari Autolines is a partnership firm and has duly offered its income to tax and after duly paying the tax, it has distributed the profits among its partners. The assessee which is a LLP is appearing as partner in the registered Partnership Deed of M/s. Kothari Autolines and as per the Partnership Deed, the assessee has received its share. Under these given facts and circumstances, I find no reason why the assessee should be denied the benefit of exemption u/s 10(2A) when the income has already suffered tax in the hands of the partnership firm M/s. Kothari Autolines and only the share of profits after paying due tax has been

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