Income from partnership firm

Dear Isha,

According to me, since the Karta is a partener in his representative capacity and not in his personal capacity, the income shall be that of the HUF and not of the Karta himself.

- Ankit

Hello isha, When you mean the karta is a member of partnership then presume you are saying that the Karta is the partner in the firm.

In that case any income from the partnership like : Partners remn, interest on capital shall be taxed in the persons HUF capacity. No doubt about it!.

@ ankit, @ rsk070: Thank You. Im satisfied by the answer. I held in my mind that since HUF is not competent to contract & therefore not eligible to ba a partnner,how can "income from partnership firm" reflect in its return of income. thus was confused

you are welcome Isha....you are right HUF is not competent to contract and that is why it is represented by the Karta..

thus, it will be the income of the HUF only..

if you have any more queries, you can ask.

Explanation1 to sec40 (b): If a person is a partner in his representative capacity in the firm & if he receives interest in his individual capacity from the firm,such interest should not be disallowed.

But in certain judicial decisions this clause is contradicted [Rashik Lal & co. vs. CIT,229 ITR 458(SC).

Is my interpretation correct?