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Closure of partnership firm

N.N.RAJAN (PROFESSIONAL) (243 Points)

09 March 2010

Dear Members,

Please consider my question and reply me with supporting decided case laws if any.

1. A partnership firm consisting of two partners is decided to be closed. But one of the partners wants to continue the business as sole proprietor in the same name to take advantage of the registrations already done in big companies clientls list. The other partner has no objection to it. Can he do so? What are the consequences in terms of PAN number, construction of dissoution deed, carry forward of losses, existing bank loans, registration with other statutory bodies etc.,

CA. N. NAGARAJAN.

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2 Replies

Chintan Shah (-) (534 Points)
Replied 09 March 2010

Dear Friend Nagrajan,

1. construction of dissoution deed

I am attaching a format for the same.. Please consider the same... make changes in it if and wherever required.

2. Carry forward of losses

Losses cannot be carried forward, if the assessee ceases to exist even though the same business is continued by someone else in the same name and substantially the same form. The exception to the above rule are amalgamation / demerger of Companies, banks and business reorganisation of co operative banks subject to the provisions of Section 72A, 72AA and 72AB respectively. Since the case above does not fall within these three exceptions, the carry forward is not allowed.

3. existing bank loans

If the existing bank loans are in the name of the partnership firm and the name of the firm is changed, the application may be made to the bank to change the name of the firm. Details regarding the reconstitution of the firm are also required to be given to the bank.

4. registration with other statutory bodies

a proprietorship is not required to be registered..

Regards

Chintan