Narendra S. Saini, Accountant Member - (1.) THESE are the two appeals filed by the assessee against the orders of the CIT (A) for the Assessment Years 1996-97 and 1997-98 dated 27/9/2000 and 10/8/2000 respectively. The common effective grounds of appeal in both the appeals are as under: - a) The CIT (A) erred in directing to allow exemption under Section 10(2A) read with Section 80HHC on share income from a partnership firm in which the assessee was not a partner. b) The CIT (A) erred in directing to allow exemption Under Section 10(2A) relying on the decisions which either relate to pre-amendment position or not squarely applicable in the present case.
(2.) Since both the grounds of appeal are correlated and as the facts and circumstance in both the years under appeal are same, they all are being disposed of together for the sake of convenience. The brief facts of the case are that Sri Radha Krishna Jallan is a partner in the firm known as M/S Rock International, Calcutta. In order to meet his capital contribution in the said partnership firm M/S Rock International, Sri Jallan entered into another sub-partnership styled M/s. Radhakishan Jallan (assessee) on 1/4/1995 by which his share of profit or loss representing 45% in the firm M/S Rock International had been assigned to the assessee -firm. The profit or loss of the assessee firm is shared by the following persons in the following proportions : - JUDGEMENT_170_TLIT0_20030.htm
(3.) IN the computation of income filed along with the returns of income the assessee firm showed 45% share of profit from the partnership firm of Rock INternational as its income and claimed the same is exempted within the provisions of Section 10(2A) of the INcome Tax Act, 1961. The AO negated the assessee's claim in as much as according to him, M/S Radha Krishna Jallan the assessee-partnership firm was not a partner of M/S Rock INternational and, hence it is not entitled for exemption Under Section 10 (2A). For this the AO relied on the decision of the Hon'ble Supreme Court in the case of Dulichand Laxminarayan v. CIT [29 ITR 535] and also on the judgment of Hon'ble Rajasthan High Court in: the case of CIT v. Ali Sher Contractors (1985) Vol. 159 ITR 534. He also observed that the charge of tax on the assessee partnership did not amount to double taxation. Further he was of the view that since there is no double taxation there is no scope of allowing exemption Under Section 10(2A) to the assessee firm. The argument of the assessee that since the income of M/s. Rock INternational, Kolkata was entitled to deduction Under Section 80HHC, the share of its partners shall also be exempt from tax, was also found not acceptable by the AO as the nature of business of M/s. Rock INternational and the assessee firm is not the same in so far as M/s. Rock INternational is engaged in export business, the assessee firm is not. The assessee preferred an appeal against the order of AO to the CIT (A). The CIT (A) vide his elaborate order accepted the claim of the assessee firm that the share of income received by it was exempt Under Section 10(2A) as well as since the business income of the assessee firm was only share income from M/s. Rock INternational, such income will retain its character as exempt income Under Section 80HHC. Being aggrieved by this order, the revenue is in appeal before us.;