whether sale of trading goods by a partnership firm to partner amounts to sale or not as per income tax act?
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Income tax
Replies (4)
yes it is sale.
is there any specific provision governing it or is there any supporting case law for it?please state that too.why could not it be treated as drawings as firm being a compedium of persons.
i dont remember the related case law in this regard, but it will be treated as sale and it is confirmed.
again u want to treat it as drawings, it is another thing. it is sale and if partner dsnt want to pay the amount and adjust it with his capital i.e. drawings, it is the second effect of this transaction.
It is sale and payment is to be adjusted with drawings. the entry will be as below:-
Partner capital a/c Dr.
To Sale
To VAT & other charges (if any)
thank u
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