10 February 2021
1) A Unregistered Partnership Firm Formed between 5 Partners in FY 2009-10 for a Specific Project for development of Open Land into Residential Apartment.
2) Firm carries out Development Work on Land (i.e. Specific Project) From FY 2012-13.
3) Every FY ITR is filed P&L, Balance Sheet is prepared. Out of 5 only Two Partners have signed such Balance Sheet.
4) Partnership Deed has a clause of Interest to be paid to Partner's who brings additional capital other than fixed Capital (i.e.Rs.10,000/-) at 12% or lower as may be mutually decided between the partners depending on the Financial Situation of the Firm, Small Profits or Loss.
5) During the Development Work from FY 2012-13 up to FY 2016-17 No Major Profit has been achieved by the Firm.
6) In FY 2018-19 Project Stands Completed One Partner post completion of Project issues Dissolution Notice to other 4 Partners.
7) In Same FY 2018-19 Tax Planning is done through appointed CA and without capitalizing Interest on Partners Capital, Firm Pays Tax on Maximum Profit Achieved as per the Ready Reckoner Rate of Unsold Inventories. Now, Post filing of ITR and Sharing of Audited Balance Sheet and P&L A/c (3 Partners) raise dispute on capitalizing Interest on Partners Capital from Period (FY 2009-10 To FY 2018-19) at the time of Settling of Accounts between partners as Per Dissolution (u/s 48 Partnership Act).
8) Can as per LAW and Income Tax Act, the Partners can claim Interest from Firm for such Period, will arbitrator allow capitalizing such Interest on Partner's Capital if the Partner's take it to the court for arbitration?
CAclubindia
