Partner exemption under firm taxation applies only to profits actually assessed in the firm's hands, not unassessed interest amounts.

Section 14(2)(b) exemption is confined to a partner's proportionate share of profits or gains of a firm that have actually been assessed to income-tax in the firm's hands. A mere computation step, omission, or disallowance in the firm's assessment is insufficient to treat a separate item as taxed. On the facts, the assessee had already received credit for his one-third share of the firm's assessed profits, but the interest received from the firm had not itself been assessed as income of the firm. The assessee was therefore not entitled to exemption on that interest amount, and relief was denied.

---

---

Issues: Whether the assessee was entitled to exemption under Section 14(2)(b) of the Income-tax Act in respect of interest received from a firm when only the firm's assessed profits had been taxed and the interest payment had not itself been assessed to tax.

Analysis: Section 14(2)(b) grants relief only where the profits or gains of the firm have actually been assessed to income-tax, and then only to the extent of the partner's proportionate share in those assessed profits. A mere calculation, omission, or disallowance in the firm's assessment does not amount to taxation of that item. The assessee had already received credit for his one-third share in the firm's assessed profit, and the separate interest amount received by him was never assessed as income of the firm.

Conclusion: The assessee was not entitled to exemption under Section 14(2)(b) in respect of the interest amount received from the firm; the answer was in the negative and against the assessee.

Final Conclusion: Exemption is confined to a partner's proportionate share in profits that have been actually assessed to tax in the firm's hands, and does not extend to amounts not so assessed.

Ratio Decidendi: Relief under Section 14(2)(b) arises only when the relevant profits or gains of the firm have been actually assessed to income-tax, not merely considered in the process of computation.

---