Multiple Partnership

1348 views 5 replies

Raman

62 Points Joined July 2008

Dear colleagues,

There are two partnership firms with A,B & C as partners of one firm and A,B & Z as partners of second firm.

Partner C in one firm and partner Z in second firm retires and the two firms now consists of partners A & B only with their

profit sharing ratio being similar in both the firm. But these two firms carry on two different business activities.

My question is:

a) Whether a new partnership deed is required to merge these two firms?

b) Whether these two partnership firms are one and the same in the eyes of IT Act, i.e. one assessee?

c) Whether they can file two separate returns with two existing PAN?

d) Whether the retirement and restructuring deed of these two firms can be made independently with out any common deed?

Pls explain.

Thanks

Raman

Replies (5)

Amir

Learner

4016 Points Joined December 2009

Dear Raman Sir,

My general understanding says -

a) Yes, if u want to merge these 2 firms then the formalities of merger are to be performed,

b) No, just becos Partners(including their ratios) are same they dont become a single entity in the eyes of law...

c) Yes as long as they are not merged they have to file returns separately for each firm.

d) Sir, can u plz eloborate ur last question, I mean what exactly u mean by "independently without any common deed"..

If u mean retirement of C & Z - Yes it will be done independently since both r different firms.

If u r asking about merger of two firms - Single deed will be executed to give effect to merger.

Sunil Liladhar Kotak

Manager (F & A)

2025 Points Joined December 2008

Completely agree with the Amir Sir

Divya K S

289 Points Joined January 2008

Mr. Amir is right.

Raman

62 Points Joined July 2008

Thanks for the replies, M/sAmir, Sunil & Divya.

Why not they be treated as same entity and file single return. Because in a partnership, in the objective clause, the partners reserve the right to carry on any other businesses if they agree upon. Why they start a new business, they need not file separate return for that. In this perspective, in my above question, there are two partnerships with same partners with the same profit sharing ratio but with different objectives. Why not claim they be treated as same assessee?

Thanks