Purchase of shares of all partners by one partner in a Partnership firm

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When one partner buys out all other partners in a firm, questions arise about its legal structure. Can it continue as a partnership, or does it become a sole proprietorship? This discussion explores the implications for the existing PAN, GST registration, and how income tax returns (ITR) should be filed. The advice suggests that if the partnership deed remains unchanged and the business continues under the same name, the existing registrations and PAN may remain valid, with adjustments to partner capital contributions and interest payments.

Tapan Parui

Tapan Parui (Querist)

26 September 2021 In a partnership firm one partner purchase the shares of all other partners. In such a case
1. Whether the business can carry on as partnership firm or as a sole proprietorship firm ?
2. Can the existing PAN will exist any more ?
3. In which PAN the ITR will be submitted ?
4. Whether existing GSTR will continue or require new GSTR ?
Kindly advice.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 September 2021 Has partnership dissolved?

Tapan Parui

Tapan Parui (Querist)

26 September 2021 There is a agreement between partners by which all partners sold their shares to one partner. Business is running in the same name and way as earlier. No separate documents about dissolution of Partnership firm.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 September 2021 So, nothing has changed as per constitution of the firm, except capital contribution.
PAN TAN GSTIN ..... etc... remains same....

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Tapan Parui

Tapan Parui (Querist)

28 September 2021 Thanks sir
One confusion, if business will submit its ITR through its exiting PAN, then how the proprietor will submit his/her ITR.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

28 September 2021 As per Partnership deed, the shares of individual partners have not changed.
For any changes to be effected in ITR, there should be change in deed to that effect.
In present condition, only interest paid to individual partner/s gets changed.

Tapan Parui

Tapan Parui (Querist)

28 September 2021 Thanks sir for your kind advice.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

28 September 2021 Most Welcome ....

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