Change in constitution- tfr of cap bal to son

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2012 my client MI is a partnership firm with M,J,H and S are partners.S died on 20.03.2011 and his son P admitted into partnership.

IT return filed for asst year 2011-12.
Partners M.J,H & S contributed 10 lakhs each.

P,deceased partners son did not contribute anything on becoming partner in his fathers place.

credit balance of S deceased partner ie Rs.10 lakhs in the name of s deceased partner.

S deceased partner is survived by 2 sons and wife. Elder son P admitted to partnership.

Now my query is

can we transfer credit bal of Rs.10 lakhs to P by book entry to cap a/c of P.
ARE there any problems?
OR
IS IT BETTER to payback credit bal of Rs.10 lakhs by a/c cheque to wife or sons and then re introduce by P the same Rs.10 lakhs in the firm.

family memmers did not have any objection in transferring Credit bal of Rs.10 lakhs to P neewly admitted partner.

kindly advise best option from income tax angle.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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23 April 2012 If you want to transfer the credit balance to the son P of the deceased partner then taken a consent letter from the other family members otherwise transfer 1/3rd share each and take P as a partner and pay interest to other legal heirs.

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