Q.Ms. Roy is a partner in a partnership firm. During the year she received her agreed share of the firm's profit. The firm has already paid tax on its total income for the year. Is Ms. Roy's share of profit taxable again in her hands? Explain with reference to Section 10(2A).

A partner's share of an already-taxed firm's profit is treated the same way as an HUF member's receipt.

Under Section 10(2A), a partner's share in the total income of a firm (this extends equally to a Limited Liability Partnership) is exempt from tax in the hands of the partner. The firm itself is a 'Person' under Section 2(31) and is separately assessed and taxed on its total income before any profit is shared out among the partners. Because the firm has already paid tax on that income, Section 10(2A) exempts the partner's share so that the same profit is not taxed a second time, once in the firm's hands and again in the partner's. Ms. Roy's s …

Confusing a partner's SHARE OF PROFIT (exempt under 10(2A)) with SALARY, BONUS, COMMISSION OR INTEREST paid by the firm to a working partner — those are separately taxable in the partner's hands …