29 September 2007
If one of the three partners retires, then under which head his creidt balance should be shown ? (1) Unsecured Loan (2) Current Liabilities. Please give the answer with reasons and considering the effects of Sections 269SS and 269T of Income Tax Act, 1961.
29 September 2007
It depends on the desire of the retiring partner. If the partner is giving his capital as loan to the Firm it should be shown in unsecured loan else its current liablity which is became payable after retirement. If the retiring partner is under the perview of relative then sections you quoted should be taken into consideration
30 September 2007
IN FACT IT IS ONLY LOAN.PROVISIONS OF SECTION 269 WILL APPLY NOW WHEN THIS LOAN IS TO BE RETURNED AND IT SHOUD ONLY THROUGH ACCOUNT PAYEE CHEQUE.
30 September 2007
Terms and conditions of retirement are important. If it is agreed to pay the credit balance of the retiring partner in due course with or without interest, the balance so payable does not take the character of loan but a liablity of the firm and as such the provisions of sec 269S or 269T of IT Act are not applicable(decided cases are there).
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