| Question And Answer | |
|---|---|
| Subject: | Application of section 45(4) |
| Category: | Income-Tax |
| Querist: | Pawan Singla |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Partnership, Retirement of partner |
| Date: | August 11, 2022 |
X is a partner in a firm along with other partners. Firm has some assets, properties etc. X has a debit balance in the firm.
He leaves the firm Without giving or taking anything.
Any tax implications for firm or partner??
The status of debit balance in the firm ??
Section 45(4) of the Income-tax Act, 1961 (Act) is not applicable as there is no cash payout on retirement of the partner. Further, there can be no implications under section 56(2)(x) of the Act in the hands of the partner, as the transaction cannot be said to be without consideration as the partner extinguishes his rights in the firm.
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