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18. In reply to the aforesaid show cause notice the assessee submitted that Sec.10(2A) of the Act clearly specifies that the total income of the firm needs to be distributed among the partners strictly and in conformity with the profit sharing ratio as defined in the partnership deed/LLP deed. The object of sub-section (2A) of Section 10 is to avoid double taxation vis-a-vis, the profits of the firm, which is distributed in the hands of the partners. It does not mean that income which is taxed in the hands of the firm is taxable in the hands of the partners and on the same principle, when the income is not taxed in the hands of the firm, it becomes taxable in the hands of the partner. The Assessee brought to the notice of the CIT, a judgment of the Karnataka High Court dated 07-02- 2014 in the case of Vidya Investment and Trading Company Pvt Ltd vs UDI (2014)[ WP.No.18813/2013 (T-IT) reported in (2014) 43 taxmann.com 1 (Karn) wherein it was held that the share of a partner in the profits of the firm is exempt u/s l0(2A) of the Act and such exemption is not restricted to amounts which is taxable in the hands of the partnership firm's hands but also includes exempt income in the hands of the firm. The Assessees also drew attention of the CIT to circular No.8/2014 dated 31-03-2014 issued by the CBDT on the provisions of section 10(2A) of the Act which clarified that 'total income' of the firm for sub section (2A) of section 10 of the Act, as interpreted contextually, includes income which is exempt or deductible under various provisions of the Act. In particular attention was drawn to the following part of the Circular which reads as follows:

25. However in circular No.8/2014 dated 31-03-2014 issued by the CBDT on the provisions of section 10(2A) of the Act which clarified that 'total income' of the firm for sub section (2A) of section 10 of the Act, it has been claried that Sec.10(2A) of the Act as interpreted contextually, includes income which is exempt or deductible under various provisions of the Act. In particular it has been clarified by the CBDT in the said Circular that the income of a firm is to be taxed in the hands of the firm only and the same can under no circumstances be taxed in the hands of its partners. It has further been clarified in the said Circular that the entire profit credited to the partners' accounts in the firm would be exempt from tax in the hands of such partners, even if the income chargeable to tax becomes NIL in the hands of the firm on account of any exemption or deduction as per the provisions of the Act. If one goes by the CBDT Circular No.8/2014, the profit credited to the partner's account in the firm would be exempt from tax in the hands of partners, viz., the sum of Rs.4,84,89,051/- which is the profit credited to the partner's account in the firm in the present case. The above clarification in the Circular implies that the share of profit in the hands of the partners is independent of the profits of the firm which is finally distributed among the partners. Even if the income of the firm chargeable to tax becomes NIL on account of ITA Nos.1895 to 1898/Kol/2017 Shri Vinod Agarwal & Ors.