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Salary or agricultural income?

ANIL KUMAR REDDY PERAM (Professional) (266 Points)

27 May 2016

THE SALARY & INTEREST RECEIVED FROM PARTNERSHIP FIRM IS TAXABLE IN THE HANDS OF PARTNER OR EXEMPTED AS AGRICULTURAL INCOME? WHERE THE SOURCE OF INCOME OF PARTNERSHIP FIRM IS ONLY AGRICULTURAL INCOME.

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9 Replies

CA Janani (ACA ACS DISA(ICAI)) (359 Points)
Replied 27 May 2016

Certain income which is treated as Agriculture Income;

(a) Income from sale of replanted trees.

(b) Rent received for agricultural land.

(d) Share of profit of a partner from a firm engaged in agricultural operations.

(e) Interest on capital received by a partner from a firm engaged in agricultural operations.

(f) Income derived from sale of seeds.

So Interest on capital is to be taken as agricultural income and becomes exempt.. whereas the salary is not exempt

3 Like

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 27 May 2016

THE SALARY & INTEREST RECEIVED FROM PARTNERSHIP FIRM IS TAXABLE IN THE HANDS OF PARTNER WHERE THE SOURCE OF INCOME OF PARTNERSHIP FIRM IS ONLY AGRICULTURAL INCOME.

same is taxable in hand of partner as salary and intrest and not exempt.

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 27 May 2016

Dear CA Janani,

as per query of Anil Kumar taxability of Salary & Interest to be checked.

U are written about profit share from such firm.

So Salary & Interest should be taxable in this case.

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 27 May 2016

Interest Amount should be treated as agricultural income if same is interest on capital.

1 Like

Madhav rao (Article assistant ) (28 Points)
Replied 27 May 2016

SALARY AND INTEREST IS NOT EXEMPT. IT IS FULLY TAXABLE.

1 Like

Anshul Mittal (Freelancing) (741 Points)
Replied 27 May 2016

Guys, after reading your comments i got confused about it,

But as much as i know as per Sec 10(2a), Profit from agriculture income is exempt from tax, Surely

BUT any income recieved by the partners from Such firm either Remuneration or Interest is TAXABLE.

1 Like

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 30 May 2016

Salary is taxable and interest on capital in exempt.

Anshul Mittal (Freelancing) (741 Points)
Replied 30 May 2016

Vinay Somani sir, i cannot say that you are wrong but i would appreciate if you provide any link or any reference to some case law or any section that says the same, because i went through some sections and it states that Only the Agricultural income is Exempt, not any income by Indirect means.