REGISTRATION OF FIRMS UNDER INCOME TAX RULE, 1962

[Mr. M. GOVINDARAJAN]

Introduction

A partnership to be recognized for the purpose of income Tax liability of the partners and their firm is required to comply with certain provisions of the Income Tax Act. While therefore drafting a deed of partnership the provisions of the Act are required to be taken in to account.   A partnership firm is required to be registered under sections 58 and  59 of the Partnership Act, though it is not compulsory.  Every change in the constitution of a partnership is also required to be registered.

Registration of firms

Chapter V of the Income Tax Rules, 1962 deals with the registration of firms.  The application for registration of firms, the rule provides, three phase of times as-

• Application made before the end of the relevant previous year;
• After filing the application any changes taken place in the constitution in the relevant previous year;
• Application filed after the end of the financial year.

Change in constitution

There is a change in the constitution of the firm-

• if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change ; or
• where all the partners continue with a change in their respective shares or in the shares of some of them

Application made before the end of the relevant previous year

•  Where the application is made before the end of the relevant previous year and where no change in the constitution of the firm or the shares of the partners has taken place during the previous year before the date of the application-

•  the application shall be made in Form No. 11;
•  the application shall be accompanied by the original instrument evidencing the partnership at the date of the application together with a copy thereof;
• a certified copy of the instrument together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument cannot be produced.

•  Where any change or changes in the constitution of the firm or the shares of the partners have taken place during the previous year before the date of the application-

• the application shall be made in Form No. 11A;
• the application shall be accompanied by the original instrument or instruments, evidencing the partnership as in existence from time to time during the previous year up to the date of the application together with copies thereof;
• a certified copy of the instrument or instruments together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument or instruments cannot be produced.

After filing the application any changes taken place in the constitution in the relevant previous year

Where after the date of making an application any change or changes in the constitution of the firm or the shares of the partners have taken place during the previous year, a fresh application shall be made after each such change takes place.

Application filed after the end of the financial year

Where the application is made after the end of the relevant previous year-

• where no change in the constitution of the firm or the shares of the partners has taken place during the said previous year and up to the date of the application, the application shall be made in Form No. 11 and it shall be accompanied by the original instrument evidencing the partnership at the date of the application together with a copy thereof.  A certified copy of the instrument together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument cannot be produced;
• where any change or changes in the constitution of the firm or the shares of the partners have taken place during the said previous year and/or after the end of the previous year but before the date of the application-

•  the application shall be made in Form No. 11A; and
•  the application shall be accompanied by the original instrument or instruments evidencing the partnership as in existence from time to time during the previous year and up to the date of the application together with copies thereof.
• A certified copy of the instrument or instruments together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument or instruments cannot be produced.

Signing the application

The application shall be signed personally by all the partners (not being minors) in the firm as constituted at the date of the application and, in the case of a dissolved firm, personally by all the persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased so, however, that in the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorized by him in this behalf, or, as the case may be, by a person entitled under law to represent him.

Intimation of changes in the firm

 If after the date of the application, or of the last application where more than one application are made, for registration of a firm for any assessment year and before the assessment for that assessment year is completed by the Assessing Officer, so far as known to the firm, any change or changes take place in the constitution of the firm or the shares of the partners, the details of such change or changes shall be communicated by the firm to the Assessing Officer as soon as possible after each such change takes place.

Declaration for continuation of registration

 The declaration to be furnished under section 184 shall be in Form No. 12 and shall be verified in the manner indicated therein and shall be signed by the persons concerned.

Benamidar partner

The communication required to be made by any partner of a firm shall be in Form No. 12A, regarding a partner who is a benamidar.  The communication shall be made in a case where the firm has not been registered, before the end of the previous year for the assessment year in respect of which registration of the firm is sought.

Certificate of registration

The certificate of registration shall be recorded on the last of the instruments evidencing the partnership during the relevant previous year (or on the certified copy submitted in lieu thereof) attached with the application for registration of the firm made.

Discussions to this article

[Mohandass Munaswamy]

Filing of Form 11, 11A ,12 ,12A is not required from assessment year 1993-94.