Capital receipt
This query is : Resolved
28 May 2010
A lump sum Payment by a Partnership firm to retiring partner for non-competing the firm business.
my queries are as follows:
1) whether payment made by firm to retiring partner is an allowable expenditure in the hand of firm
2) whether received by retiring partner is an exempted income in the hand of partner.
my queries are as follows:
1) whether payment made by firm to retiring partner is an allowable expenditure in the hand of firm
2) whether received by retiring partner is an exempted income in the hand of partner.
03 June 2010
1. The payment made by the firm to the retiring partner will be allowable expenditure in the hands of the firm.
2. Please refer Sec.28(va) where it says any sum received or receivable in cash or kind under an agreement for not carrying out any activity in relation to any business, then it will be taxable under the head "Profits and Gains of business or profession". Therefore, the amount so received by the retiring partner will be taxed in his hand as business income.
2. Please refer Sec.28(va) where it says any sum received or receivable in cash or kind under an agreement for not carrying out any activity in relation to any business, then it will be taxable under the head "Profits and Gains of business or profession". Therefore, the amount so received by the retiring partner will be taxed in his hand as business income.
07 June 2010
I agree. what will be status if amount is paid as a goodwill to the retiring partner.
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