assessment of firm

[Ritesh Jha]

Will transfer of income from firm by partner to an assignee be treated as subpartnership and thus,will the same be exempt in hands of assignee???

AI Summary

Income Transfer by Partner to Assignee Recognized as Sub-Partnership, Exempt Under Section 10(2-A) of Income-Tax Act. A forum participant inquired whether the transfer of income from a firm by a partner to an assignee would be considered a sub-partnership and thus exempt for the assignee. The response clarified that such a transfer is treated as exempt in the hands of the sub-partner. It explained that a sub-partnership, recognized under the Income-Tax Act, diverts income at source from the main partnership to the sub-partnership, creating an enforceable right for the sub-partnership to claim profits. This arrangement does not alter the partner's status in the main partnership but affects tax assessment under section 10(2-A) of the Income-Tax Act.