KOTHARI FEEDS LLP,PUNE V. C 1 RANGE 56 CIRCLE 5, PUNE, PUNE

ITA 326/PUN/2025

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Kothari Feeds LLP, a Limited Liability Partnership, appealed against the order of the Ld. CIT(A) which denied them an exemption under section 10(2A) of the Income Tax Act for the share of profit received from another partnership firm, M/s. Kothari Autolines. The CPC initially denied this exemption, leading to the appeal before the Ld. CIT(A), which also upheld the denial. The Tribunal, referencing a decision from a Co-ordinate Bench in Bangalore, found that the LLP was indeed eligible for the exemption as the profits had already been taxed in the partnership firm and only the net profits were distributed to the partners.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 653232 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Other Referred Cases: Mulberry Textiles LLP vs. ITO [2023] 147 taxmann.com 267
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. SADANANDA SINGH
• Assessee Lawyers: NIKHIL PATHAK
• Keywords: Earning of tax free income; Benefit of exemption

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.326/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year : 2020-21 Kothari Feeds LLP, Summet Plaza, E-30/31, Gultekdi, Market Yard, Pune- 411037. PAN : AATFK1257C Vs. ADIT, CPC, Bengaluru. Appellant Respondent आदेश / ORDER PER MANISH BORAD, AM: This appeal filed at the instance of assessee is directed against the order of Ld. Addl./JCIT(A), Udaipur [‘Ld. CIT(A)’] dated 11.12.2024 which is arising out of the intimation u/s 143(1) of the Act for Assessment Year 2020-21 framed on 25.11.2021 by the ADIT, CPC, Bengaluru. Assessee by : Shri Nikhil Pathak Revenue by : Shri S. Sadananda Singh Date of hearing : 18.06.2025 Date of pronouncement : 20.06.2025 ITA No.326/PUN/2025 2 2. The only issue raised in this appeal is regarding denial of exemption u/s 10(2A) of the Act for the share of profit received from partnership firm, M/s. Kothari Autolines. 3. Brief facts of the case are that the assessee is a Limited Liability Partnership (LLP) and is a partner in another partnership firm M/s. Kothari Autolines and in the return of income filed on 28.11.2020 for A.Y. 2020-21 exempt income at Rs.2,42,710/- claimed u/s 10(2A) of the Act. The CPC denied the said exemption against which the assessee preferred an appeal before Ld. CIT(A) but failed to succeed. Now, the assessee is in appeal before this Tribunal. 4. Ld. Counsel for the assessee raised two folds arguments firstly, the adjustments made by the CPC is not in accordance with section 143(1) of the Act and secondly, the assessee LLP is eligible for exemption u/s 10(2A) of the Act being partner in another partnership firm. Further Ld. Counsel for the assessee relied on the decision of Co-ordinate Bench, Bangalore in the case of Mulberry Textiles LLP vs. ITO [2023] 147 taxmann.com 267. 5. On the other hand, Ld. Departmental Representative supported the orders of both the lower authorities. ITA No.326/PUN/2025 3 6. I have heard rival contentions and perused the records placed before me. The grievance of the assessee is that Ld. CIT(A) erred in confirming the action of the CPC by not allowing the exemption u/s 10(2A) for the share of profit of Rs.2,42,710/- received from the partnership firm, M/s. Kothari Autolines. Ld. CIT(A) has denied the exemption stating that a LLP cannot become a partner in partnership firm. I however notice that assessee a LLP has been allowed to become a partner in a partnership firm by the Registrar of firm who has registered the partnership firm. Before me, the limited issue is regarding exemption u/s 10(2A). It is not in dispute that M/s. Kothari Autolines is a partnership firm and has duly offered its income to tax and after duly paying the tax, it has distributed the profits among its partners. The assessee which is a LLP is appearing as partner in the registered Partnership Deed of M/s. Kothari Autolines and as per the Partnership Deed, the assessee has received its share. Under these given facts and circumstances, I find no reason why the assessee should be denied the benefit of exemption u/s 10(2A) when the income has already suffered tax in the hands of the partnership firm M/s. Kothari Autolines and only the share of profits after paying due tax has been ITA No.326/PUN/2025 4 distributed to its partners. I therefore set-aside the findings of Ld. CIT(A) and allow the claim of exemption u/s 10(2A) at Rs.2,42,710/-. Effective grounds of appeal raised by the assessee are allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced on 20th day of June, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 20th June, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Addl./JCIT(A), Udaipur. 4. The Pr. CIT/CIT concerned. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “SMC” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "