Accounting treatment For Earlier losses

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28 July 2022 Dear Sir/MADAM,

We want to convert Our LLP in to Private Limited Company .
As per LLP Agreements , We have transferred Losses for Previous 3 years To partners Fluctuating Capital .
But now We want To Transfer That Losses For Previous years To Reserve and Surplus from Partners Fluctuating Capital .

Can We give this Accounting Treatment Retrospective By Modifying LLP Agreement In Dated Fy 2021-22 ?

Request For Expert View Asap With Relevant Provisions For The same .

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 July 2022 No. Retrospective effect will not be accepted by ITO.

CA jignesh daiya

CA jignesh daiya

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29 July 2022 But As per income tax return , we have carry forward losses for Llp only And not partners account But For Accounting entry , We have transferred To partners account .
Whether that will make any difference ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 July 2022 The only question is the original deed should support your working/s.

CA jignesh daiya

CA jignesh daiya

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29 July 2022 Can we amend Original LLP Agreement With Consent of all partner to give retrospective effect of Loss In Current year and reverse the entry or modify the entry For Previous year losses ?

If Not , We want to convert llp Into Private limited Company , How balance reconcile with Income tax return and accounts ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 July 2022 1. For income tax purpose it will not be accepted.
2. Loss would decrease the partners' capital account.

CA jignesh daiya

CA jignesh daiya

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29 July 2022 we can not amend Original LLP Agreement With Consent of all partner to give retrospective effect of Loss In Current year and reverse the entry or modify the entry For Previous year losses. Right ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 July 2022 Yes, generally, ITD do not accept such retrospective changes in partnership deed for IT calculations.

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