Partner Ship firm

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 February 2011 A partnership firm having two partners. The net profit of the firm in crores. Now the existing partner's want to introduce two new partner without any capital or a minimum capital say rs. 50000/- from each. At the end of the year the nete profit will be distributed to all the four partner's. There is no extra expenses bookedby the firm due to indroduction of partner's. Hence firm will pay taxes as usual as it will pay without introduction of new parners. But funds are diverted in four partner's and the profit will be exempt in the hands of the partner. Now my basic issue is that a huge capital account will be created of new partners without any major capital and without paying any tax. is it practicable or any section of any law will attract it as diversion of funds.

Guest

Guest (Expert)

10 February 2011 Nothing wrong if it is genuine firm.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 February 2011 yes it is a genuine firm operating bussiness from last 3 - 4 years.but my basic question is that it is a diversion of funds. is it not the violation of law either of Income tax or partnership act.

Guest

Guest (Expert)

14 February 2011 There should be no problem.

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