Question And Answer
Subject: LLP income tax
Querist: rajesh
Answered by:
Tags: , ,
Date: May 20, 2022
Query asked by rajesh

In a LLP partners capital is at Rs 10 lacs and reserves and surplus are of Rs 100 lacs. on dissolution of partnership, partners will get 110 lacs .

whether 100 lacs received on dissolution is taxable in the hands of partner.

note reserves and surplus created from share premium account , and stand as reserves in LLP on conversion from company to LLP

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As we understand, as per the formula given under section 45(4) of the Income-tax Act, the capital account may be represented in any manner. Therefore, the ‘reserves and surplus’ forms a part of the Capital of the Partner. Hence, the sum of Rs. 100 lakhs should not attract section 45(4) of the Act.

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