partnership
This query is : Resolved
22 June 2011
can a wife and husband be a partner in a partnership firm , if yes please tell in a brief
23 June 2011
if both are professional and qualified to handle a business in self capacity, then they can join hands in a partnership firm, but if anyone is layman and mere for book entry the firm is constituated, then it would be clubbed in hands of the assessee whose tax bracket is high.
23 June 2011
I am very sorry to say that in business of any type any one or all family members can be partners.
As regards professional firms there is restriction that like goes with like means only professionally qualified persons can join partnership with a professional.
Let me tell you even in professional firm i.e C. A. firm, if it is partnership firm if the husband of a illiterate woman expires or dies she can be taken as a partner with the restriction that she cannot sign the Balance Sheet and the limit of audit will not be allowed.
Hence, as per the partnership act no where it is restricted that wife cannot be taken as partner but the capital introduced in the firm must belong to her and she can remain as financial partner. The only problem comes when the person is a proprietor and he pays remuneration to his wife who is not qualified then the provisions of section 40A(2) will come in play and it depends on the assessing officer to allow the full remuneration or not.
As regards professional firms there is restriction that like goes with like means only professionally qualified persons can join partnership with a professional.
Let me tell you even in professional firm i.e C. A. firm, if it is partnership firm if the husband of a illiterate woman expires or dies she can be taken as a partner with the restriction that she cannot sign the Balance Sheet and the limit of audit will not be allowed.
Hence, as per the partnership act no where it is restricted that wife cannot be taken as partner but the capital introduced in the firm must belong to her and she can remain as financial partner. The only problem comes when the person is a proprietor and he pays remuneration to his wife who is not qualified then the provisions of section 40A(2) will come in play and it depends on the assessing officer to allow the full remuneration or not.
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23 June 2011
brilliantly explained by agarwal sir..
if simplified
1. as per partnership act ; no restriction, both life partners can become business-partners.
2. as per Income tax act : you have to be cautious with clubbing provisions and reasonable remuneration
if simplified
1. as per partnership act ; no restriction, both life partners can become business-partners.
2. as per Income tax act : you have to be cautious with clubbing provisions and reasonable remuneration
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