Held that on the date of conversion of the firm, the firm is dissolved and a new entity was created as a limited liability partnership. Accordingly, the income earned after the date of conversion was recorded in the hands of the limited liability partnership and not the dissolved firm. Therefore, during the year under consideration, since no income was earned by the dissolved firm, no return of income was filed by it. However, the limited liability partnership duly accounted for all the transactions, offered to tax all the income credited to its account and filed its return for the year under consideration. The firm had requested all the deductors to issue new certificates of tax deduction at source in the name of the limited liability partnership formed on dissolution of the firm. However, certain deductors issued the certificate in the name of the erstwhile firm. In the reassessment proceedings, statutory notices under sections 143(2) and 142(1) were issued and served on the firm which were duly responded to by it with the clarification that no income was earned by it and, therefore, no return was filed for the year under consideration. The income earned belonged to the limited liability partnership and had been so shown in the return filed by it. The Assessing Officer completed the assessment at the returned income without making any additions in the hands of the firm. There is no basis in the findings of the Principal Commissioner that due verification was not made by the Assessing Officer. Since, the tax deducted at source as appearing in the name of the firm is only allowed to the firm and not to the limited liability partnership despite the corresponding income being offered to tax by the limited liability partnership, no prejudice had been caused to the Revenue. Revision is quashed. AY.2016-17)
United Brothers Multiplast LLP v. PCIT (2024)116 ITR 66 (SN)(Mum)(Trib)
S. 263 : Commissioner-Revision of orders prejudicial to revenue-Conversion firm to limited liability partnership-Firm dissolving on date of conversion-Income earned recorded in hands of Limited Liability Partnership-Tax deducted at source appearing in Firm’s name only allowed to firm and not limited liability partnership-No double grant of credit-Revision is not valid. [S. 142(1) 143(2)]
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