LLP receiving share of profit from other partnership firm is eligible for exemption under Income Tax

Last updated: 10 February 2023

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The Income Tax Appellate Tribunal (ITAT) in Bangalore has ruled that a Limited Liability Partnership (LLP) is to be treated as a firm under the Income Tax Act. Consequently, an LLP receiving a share of profits from another partnership firm is eligible for exemption under Section 10(2A) of the Act. This decision clarifies that LLPs can indeed be partners in other firms and their share of profits is not taxable if the firm itself is assessed.

Court :
ITAT, Bangalore

Brief :
The ITAT, Bangalore in M/s Mulberry Textiles LLP v. ITO [ITA No. 757/Bang/2022 dated January 3, 2023] has held that, Limited Liability Partnership ("LLP") is to be treated as a firm under the Income Tax Act, 1961 ("the IT Act") and a firm can be a partner in other partnership firms therefore, the assessee being a LLP is eligible to exemption under Section 10(2A) of the IT Act from the share of profit received from other partnership firms.

Citation :
ITA No. 757/Bang/2022 dated January 3, 2023

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1999

(Excl. of GST ₹359)

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3499

(Excl. of GST ₹629)

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3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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