TAX AUDIT FOR AY 2009-10

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This query is : Resolved

M K MODY (Querist)

02 July 2009 A PARTNERSHIP FIRM HAVING 2 PARTNERS [HUSBAND & WIFE] CARRIED ON THEIR BUSINESS OF SAMPLE ANALYSIS. DURING THE MONTH OF JAN 2009 WIFE DIED. ACCOUNTING METHOD ADOPTED - CASH BASIS. AFTER HER DEATH, HUSBAND CARRIED ON BUSINESS IN THE NAME OF FIRM [INDIVIDUAL STATUS]. MY OPINION IS : BOTH BUSINESS ARE SEPARATE. HE HAD TO CLOSE BOOKS OF HIS PARTNERSHIP FIRM ON THE DAY OF DEATH OF HIS ONLY PARTNER. HE HAS TO TAKEOVER ENTIRE BUSINESS AS AN INDIVIDUAL ON THE SAME DAY AND HAS TO PREPARE NEW BOOKS OF ACCOUNTS FOR BALANCE PERIOD OF THE FINANCIAL YEAR. TAX AUDIT IS REQUIRED ONLY IF ONE OF THE BOOKS HAVE INCOME EXCEEDING Rs. 10 LAKHS. LET ME KNOW, AM I RIGHT OR WRONG ?

Praveen Sharma

Praveen Sharma (Expert)

02 July 2009 yes u r right.

since as per Income Tax Act two or more partners must be there.

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CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

02 July 2009 You please check whether any will is there which wife has made. And also check whether legal heirs are there and as per will to whom the business goes.

In that case the next person legal heir will become the partner and partnership will be continued.

If no heirs are there and only husband is there, then only the firm will get converted to proprietorship.

Based on the above you have to take a decession.

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Sanjeev Jain

Sanjeev Jain (Expert)

02 July 2009 hie,

As far as I,TAx is Concerned parveen is right bcoz as per sec 2(31) both are separate identity and can not be accessed under a single umbrella.

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NITIN

NITIN (Expert)

02 July 2009 As per IT Act tax audit is require to be do in case if gross receipts in case of professional income of a person etc exceeds 10 lakhs.Also there should be at least two partner in partnership deed and in case if it is less than thses than concern is not treated as partnership firm. Therefore you are right.

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Amit Sheode

Amit Sheode (Expert)

02 July 2009 In my opinion the only issue that needs to be seen in this case is as to whether there is any fiction in IT Act whereby the TO of the partnership firm can be clubbed to that of the surviving individual for the purpose of IT Audit. Or otherwise there is no occasion to invoke audit

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M Prabhakar Menon

M Prabhakar Menon (Expert)

02 July 2009 As per S44AB u r right

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M K MODY

M K MODY (Querist)

04 July 2009 Thanks

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