26 May 2020
Transactions Between The Firm And Its Partners Generally, there may be following type of transactions between the firm and its partners –
(i) Capital contributions made by the partner to the firm : This transaction is related to the receipt by the firm from its partner. The provisions of Section 269ST are very well applicable to this also. It is so because the provisions of Section 269ST are applicable to each and every receipt irrespective of its nature and irrespective of relation between the parties.
It is applicable (i) whether the receipt is for business purpose or for personal purpose (ii) whether the receipt is with or without consideration (iii) whether the receipt is of capital or revenue nature.
It is not applicable only in cases – (i) where there is specific exclusion / exemption in the Section 269ST itself ; or (ii) where exemption has been granted by the government way of any notification ; or (iii) non applicability has been clarified by the government by way of any clarification etc.
There is no specific exclusion / exemption / clarification etc. regarding capital contribution made by the partner to its firm. Therefore, the provisions of Section 269ST are very well applicable to the capital contribution made by the partner to the firm.
(Note :- In this transaction, Section 269ST is applicable to the firm (who is the recipient) and not to the partner.)
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