Investment in mutual fund by partnership firm

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Nishant shah

AUDIT ASSISTANT

302 Points Posted on 06 April 2019

I have different views of all regarding making Invt in MF by P'ship Firm. Someone says that firm & partners are same so firm can't make investment else legal dispute would have face so its better to transfer fund from firm to partners personal account for making invt .

Can P'ship firm make investment in Mutual fund for ideal funds remaining and If so, anyone has any scheme wherein firm can invest for good return having liquid fund and there is no problem in facing taxability on it because ultimately firm has to pay tax at highest rate as per law..

I want to know;

1) Whether firm can make Investment in Mutual fund

2) If so, suggest any scheme wherein it can be invested

3 If no, then what are other ways for making investments for firm?

Replies (4)

CA Ankit Singhal

Practicing CA in Delhi

348 Points Posted on 06 April 2019

Yes as partnership firm can open its separate mutual fund account. Even though a partnership firm can make investments, one should understand that a partnership firm is not a separate legal entity like a company incorporated under the company law. Therefore, the partners are technically joint owners.

The partnership deed, the contractual instrument that brings the firm into existence, shall expressly permit such investment. The mutual fund(s) will usually demand a certified copy of the partnership deed to ensure that such investments are permitted. The deed should also mention which partner(s) are authorised to apply for make investments in mutual funds.