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LLP Losses in the hands of partner

Pankaj Arora (Learner) (3134 Points)

22 December 2018

Hi...

ABC LLP had incurred Rs 1 Lakh loss in the financial year 2018, my query is wheather partner of ABC LLP have to show losses incurred by LLP in their personal ROI.

As per my understanding, if there if profit earned by the firm that's exempt in the hands of partners, and when losses incurred by the firm that losses should be carried forward by firm only.

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7 Replies

Ruchika Somani (Coaching and Practice in Tax Audit Law.) (4429 Points)
Replied 22 December 2018

Yes, as profit is shown same way loss also have to be shown in personal ROI of partners

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AKASH DHANUKA (42 Points)
Replied 22 December 2018

losses of firm can be carried forward only by a firm and not by the partners in any case.. as a law in general as per chapter vi of the act, the Assessee who incurred the losses and who want to carry forward the same must be the same person.. exception given in chapter vi doesn't cover firms ...and also this is not the case of inheritance...so crux is that losses of firm can be carried forward and set off only by a firm and not by the partners in any case

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Uday Rathi (133 Points)
Replied 23 December 2018

The basic fact should also he appreciated that
firm pays tax on its profits and thereafter profits after tax are distributed to the partners
i.e Burden of Tax is on Firm.
Then in case of loss Benefit will be to firm to C/F the losses.

Also, as per chapter of Set off and C/F of Losses can be carried forwarded only by the assessee who incurs it