PLEASE SEND ME YOUR OPINION ON ABOVE SUBJECT, WHETHER AFTER THE DEATH OF ONE PARTNER ( OUT OF TWO PARTNER)CAN REMAINING PARTNER COUNTINUE THE BUSINESS WITH THE LEGAL HEIR OF THE DECEASED PARTNER. IF YES WHAT IS THE PROCEDURE AND STEPS NEED TO BE FOLLOW UNDER THE INCOME TAX ACT AND THE PARTNERSHIP ACT
PLEASE SEND YOUR VALUED OPINION ON MY EMAIL rmshah@vsnl.net
DISSOLUTION OF PARTNERSHIP FIRM The Act also provides that a Partnership firm may be dissolved under the following circumstances namely: (a) as a result of any agreement between all the partners; or (b) by adjudication of all the partners or all partners but one as insolvent, or; (c) by the happening of an event which makes it unlawful for the business of the firm to be carried on in Partnership or; (d) subject to agreement between the parties, on the happening of any of the following events such as (i) efflux of time, (ii) completion of the adventure, (iii) death of a partner, and (iv) insolvency of a partner. In these last four cases the Partnership agreement may provide events. Even if the deed provides that the Partnership will not be dissolved on the death or insolvency of a partner, it does not mean that on the death or insolvency of a partner he ceases to have interest in the Partnership property. In such cases his interest in the Partnership property will survive to his heirs in case of his death and to his assignees in case of insolvency. In the absence of a term in the deed of Partnership to that effect, it cannot be that, the Partnership shall continue, and notwithstanding the death of a partner it will operate to extinguish his proprietary rights in the assets of the Firm. A Partnership can also be dissolved by the Court under the circumstances mentioned in Section 44 of the Act. Where the Partnership is ‘at will’ the Partnership can be dissolved by any partner or partners giving notice his/their intention to dissolve the firm.
22 December 2010
You need to dissolve the existing partnership deed and enter into another deed effective from next day in the same firm name and get it registered.
Under Income tax you need to file two return of Income one for the period before the date of entering into new partnership deed and another after that date. The assets and liabilities as on the last date of earlier partnership will be as opening balance in the new firm's books.
CAclubindia
