Treatment of loss in case of partnership firm

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CA. Bhawana Joshi (Querist)

11 May 2018 Hi Sir,

I have a problem related to treatment of "Loss of capital in case of partnership firm". The background of case is as follows:

I am a salaried person, parallelly I am a partner in a partnership firm from Fy 16-17.Now in April I sold my share at loss to another person who is an incoming partner. Why I am saying a loss is because the Capital introduced is more than the value of my share sold.

Now my confusion is against which head of income should I set off this capital loss. As we know that loss of partnership firm is set off against the same head but this case is different due to my discontinuation from the firm as the partner.

Appreciate your expert advice.

Warm regards,

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

14 May 2018 1. The Background (dealing with capital loss of a partner) and the Foreground ( showing the loss as of the firm) are talking differently. These should be in coherence however, it is clear from the background that your query is in relation to the loss of your capital.
2. You have received lesser because some one has received more and that too without consideration -but this is beyond the scope of present query..
3. The query is related to the partner receiving lesser amount than the amount to her credit if the firm.
4. The loss of capital is resulted without transfer of any capital asset and hence not adjustable against any income.
You may refer the following article dealing with relevant case laws -https://taxguru.in/income-tax/amount-received-partner-retirement-exempt-capital-gains-tax.html

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