is partnershiip firm is a person as per defination

Page no : 2

vikash rathi (Chartered Accountant) (787 Points)
Replied 29 April 2010

no its not legal enityt it is just a representative of partner

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priyanka bathwal (student) (160 Points)
Replied 30 April 2010

Firm is a person and pays tax on its income and thats why the share in profit to partners from a partnership firm is tax free

But for wealth tax firm is not a person and the interest in firm is taxable in the hands of partner

Sandeep Pandey (CA FINAL) (1306 Points)
Replied 30 April 2010

yes............

CA SURENDRA KUMAR RAKHECHA (Practising CA at Surat) (26263 Points)
Replied 05 May 2010

In Income Tax Act, it is considered as a Person u/s 2(31) and it is also assessed as such.

For the purpose of other acts; it is not a separate legal entity hence all the partners are personally liable to the acts of the partnership.

Even in the Income-Tax Act, the if the firm does not pay the tax liabilities then all the partners are jointly and severally liable to pay the tax liabilities.

From practical angles; a partnership registered with ROF can sue other parties in its own name. Here also it does not mean that it is a separate legal entity. The provisions have been made in the enactment to facilitate the legal action and rights rather than approving it as a separate legal entity.

An HUF cannot enter into partnership (even represented by Karta) as is now well settled (supra by one learned member).

So if query is restricted to Firm for Income-Tax purpose; it is a person because it is an assessable distinctly from its partners.

Preeti Agarwal (Articled) (218 Points)
Replied 08 May 2010

For I.Tax purpose - Firms are considered under definition of Person and assessed as such. For Wealth Tax purpose - Firm is not assessable seperately. Instead the value of interest of partners in firm are included in the wealth of the partner's in their individual capacity. Exemption u/s 5 applies to partners. For any other purpose - Firms are not treated as seperate legal entity. It is represented by their partners and partners are personally jointly and severally have unlimited liability. Hope this helps you.