is partnershiip firm is a person as per defination

Tax queries 2349 views 19 replies

dear friends 

i have one query that 

is partnership firm is include in definition of persons 

Replies (19)

No.......

Bcoz its Not a Legal Person

and Partners are personally liable & Their liability is unlimited.

^^^

 

But Person includes Firm as per 2(31) of the Income tax act.

I think this is IT query.....

Nope.. A partnership is not a person in eyes of law...

 

The partners of the firm are personally liable for the acts of the firm

 

The term 'person' is not defined by the Partnership Act. Section 2(42) of the General Clauses Act defines 'a person' to include a company or an association or body of individuals, whether incorporated or not. But the Supreme Court has held that this definition cannot be imported into the Partnership Act, and the 'person' under the Partnership Act means either an individual or any other legal entity such as a Limited Company registered under the Companies Act, or any other Corporation constituted by or under any act of the Legislature as a body corporate. The Supreme Court has observed that it is now well settled that Hindu Undivided Family cannot as such enter into a contract of partnership with another person or persons because it is a fleeting body, its composition changes by births and deaths, marriages and divorces and such a partner- ship is likely to have a precarious existence. It, therefore, follows that a body of individuals such as an unincorporated society cannot as such become a partner in a firm. It also follows that a partnership firm cannot as such enter into a partnership with another individual or legal entity, or with any other partnership firm because a partnership as such is not a .person. But in the case of   H.U.F. the Karta of the family or a member thereof can become partner with another individual or with other legal entity or even with the partners or partner of a partnership firm because in such a case It is the Karta or the individual member who is the partner for all purposes and not the joint family whom he represents and the family does not become a partner of the firm. It has been held that when two Kartas of two H.U.Fs. enter into a partnership agreement, the partnership though popularly known as one between the two HUFs, in the eye of law, it is a partnership between two Kartas and the other members of the two families do not 'ipso facto' become partners. There is nothing to prevent individual members of one H. U. F. from entering into a partnership with the individual members of another H.U.F. and in such a case it is the partnership between the individual members and it is wholly inappropriate to describe such a partnership as one between two HUFs. When the Karta of a H.U.F. enters into a partnership with a stranger the members of the family do not ipso facto become partners in that firm and they have no right to take part in its management or to sue for its dissolution.

 

Person includes Firm as per 2(31) of the Income tax act  1961.

 

 

As per IT act 1961 u/s 2(31)

Person Includes

an individual

a company

a firm

an AOP or BOI

a local authority

every artificial judicial persons not falling other category.


As per IT Partner ship firm is person...

But in the eyes of law it is an artificial person and the partners are liable to the liabilities.

agree with poornima mam

as per defination of person, "firm" is eligible

yess... it is as per IT act...

thanks to all for solving this query 

but still their are doubt that 

include or not 

because when we are going to assess their income the income is always being part of partners nor firm 

kindly solve this again 

thanks once again

i found my answer 

in section 2(23)

"“firm” shall have the meaning assigned to it in the Indian Partnership Act, 1932"

and under partnership act 1932

 

Partnership Firm is not a legal entity -  It may be surprising but true that a Partnership Firm is not a legal entity. It has limited identity for purpose of tax law. As per section 4 of Indian Partnership Act, 1932, 'partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. - - Under partnership law, a partnership firm is not a legal entity, but only consists of individual partners for the time being. It is not a distinct legal entity apart from the partners constituting it - Malabar Fisheries Co. v. CIT (1979) 120 ITR 49 = 2 Taxman 409 (SC).


and one more thing

FIRM LEGAL ENTITY FOR PURPOSE OF TAXATION - For tax law, income-tax as well as sales tax, partnership firm is a legal entity - State of Punjab v. Jullender Vegetables Syndicate - 1966 (17) STC 326 (SC) * CIT v. A W Figgies - AIR 1953 SC 455 * CIT v. G Parthasarthy Naidu (1999) 236 ITR 350 = 104 Taxman 197 (SC). Though a partnership firm is not a juristic person, Civil Procedure Code enables the partners of a partnership firm to sue or to be sued in the name of the firm. - Ashok Transport Agency v. Awadhesh Kumar 1998(5) SCALE 730 (SC). [A partnership firm can sue only if it is registered].

my friend. the income wont be treated as income of partners for income tax. it will be treated as income of firm and tax will be paid by partnerhsip firm and the profit will be shared between the partners....which is non taxable for them.....

as per the provisions of income tax person includes firm


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