whether sale of trading goods by a partnership firm to partner amounts to sale or not as per income tax act?
4 Replies
CA Nitin K. Varshney
(FCA DISA CCA Peer Reviewer (ICAI))
(616 Points)
Replied 18 August 2013
yes it is sale.
CA Ksheerabthi Nathan
(CA in practise)
(167 Points)
Replied 19 August 2013
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.
CA Nitin K. Varshney
(FCA DISA CCA Peer Reviewer (ICAI))
(616 Points)
Replied 24 August 2013
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)
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