Reconstitution and Dissolution of a partnership - are not
Finance Minister Nirmala Sitharaman proposed many new measures in the Budget to prop up the declining economy amid the Covid pandemic and boost spending across sectors. Several direct taxes and indirect taxes amendments were also proposed. Let us learn more about the clarifications that were brought about for Capital Gains on Dissolution or Reconstitution of a firm in Budget in this article. The partnership is an agreement between two or more persons for sharing the profits of a business carried on by all or any one of them acting for all. Any change in the existing agreement is known as reconstitution of the partnership firm. Dissolution of a firm amounts to a complete closure of the business. When any of the partners dies, retires or become insolvent and if the remaining partners discontinue the business of the firm, then it is a dissolution of firm. On dissolution of the firm, the business of the firm ceases to exist since its affairs are would up by selling the assets and by paying the liabilities and discharging the claims of the partners.Reconstitution and Dissolution of a partnership - think
Budget Rationalisation of provision of transfer of capital asset to partner on dissolution or reconstitution. The existing provisions of section 45 of the Act inter alia, provides that any profits or gains arising from the transfer of a capital asset shall be chargeable to income-tax under the head Capital gains and shall be deemed to be the income of the previous year in which such transfer takes place. Fur-ther sub-section 4 of the said section, provides that the profits or gains arising from the transfer of a capital asset by way of distribution of capital assets on the dissolution of a firm or other associ-ation of persons or body of individuals not being a company or a co-operative society or other-wise, shall be chargeable to tax as the income of such firm or other association of persons or body of individuals of the previous year in which the said transfer takes place. Further, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consid-eration for the purposes of section In this regard, it has been noticed that there is uncertainty regarding applicability of provisions of aforesaid sub-section to a situation where assets are revalued or self-generated assets are record-ed in the books of accounts and payment is made to partner or member which is in excess of his capital contribution. Reconstitution and Dissolution of a partnership
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Answer in one sentence only. Sum Number 1. Sum Number 2. Sum Number 3. Sum Number 4.
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Practice paper Chapter 5 — Reconstitution of Partnership. All the very best Related posts: Chapter 6, Dissolution of Partnership Firm, hsc, accounts, full solution.
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