S. 10(2A): CBDT Issues Important Circular On Taxability Of Firms And Partners
The CBDT has issued Circular No. 08/2014 dated 30.03.2014 to deal with the controversial topic as to whether, if the income of the firm is Nil on account of an exemption under Chapter III or deduction under Chapter VI-A of the Act, the partners will also be entitled to claim exemption u/s 10(2A) of the Act with respect to their share in the profits of the firm. The CBDT has clarified that the term “total income” in s. 10(2A) includes income which is exempt or deductible under various provisions of the Act. It is stated that the income of a firm is taxable only in the hands of the firm and can under no circumstances be taxed in the hands of the partner. The CBDT has made it clear that the entire income credited to the partners’ account in the firm would be exempt from tax in the hands of the partners, even if the firm is also not chargeable to tax on account of an exemption or deduction (Read analysis of Circular in Business Standard).
CBDT Creates Action Plan For Timely Disposal Of Important Matters
The CBDT has, in a letter dated 31.03.2014 to Chief Commissioners, set out a “Central Action Plan” for the April to June 2014 Quarter. The said Action Plan sets out a time frame for handling several important issues such as correction of demand, recovery of demand, disposal of high-demand appeals by CIT(A), completion of s. 147 assessments etc, etc. The Chief Commissioners have been directed to circulate the said Action Plan amongst the officers for necessary action.
Regards,
Editor,
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