| Question And Answer | |
|---|---|
| Subject: | WE HAVE A PARTNERSHIP FIRM WITH 9 PARTNERS AND 6 WANT TO RETIRE |
| Category: | Income-Tax |
| Querist: | Kabir Dhupar |
| Answered by: | Law Intern |
| Tags: | Partnership |
| Date: | December 14, 2025 |
WE HAVE A PARTNERSHIP FIRM WITH 9 PARTNERS AND 6 WANT TO RETIRE ,
WE HAVE VERY LOW CAPITAL ACCOUNT BUT FIRMS HAS THE ASSET WHICH HAS HIGH FMV AND GRV HOW CAN WE RETIRE THE PARTNERS ,HOW MUCH SHARE VALUE CAN BE CONSIDERED AND ON WHAT GROUNDS
The partners will have to give notice of their retirement. A deed of reconstitution will have to be prepared. The assets of the firm will have to be revalued and the retiring partners will have to be given their share.
U/s 45(4) of the Income-tax Act, if revaluation leads to crediting gains to partners’ accounts or if money/assets exceeding the retiring partners’ capital balance are distributed, the firm will have to pay tax.
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