Assessment of Firm - Section 184 - Income Tax - Ready Reckoner - Income Tax

Assessment of Firm - Section 184 A firm shall be assessed as a firm for the purposes of the Act if: The partnership is evidenced by an instrument, and The individual shares of the partners are specified in the instrument. Conditions for assessment as a Firm A copy of the instrument of partnership certified by all partners (other than major partners) should be furnished with the return of income of the previous year in respect of which assessment as a firm is first sought. The individual share of the partners are specified in the partnership deed. Also the deed must spell out the proportion in which losses are to be shared among the partners. Where any change in constitution had taken place in the previous year, the firm shall furnish a certified copy of the revised instrument of partnership along with the return of income for the assessment year relevant to such previous year. The copy of instrument of partnership should be certified by all partners, not being minors. If the firm does not comply with the conditions of section 184 or there is any failure on the part of the firm as is mentioned in section 144 (Best Judgement Assessment) then: The interest and remuneration paid to the partners will be fully disallowed in the hands of the firms; and Interest and remuneration shall not be taxable under section 28(v) in the hands of partners.