Assessment of ‘Firm’

 

Table of Contents:

·         1.   Salient Features of the Assessment of a Firm:

·         2.   Essential conditions prescribed under Section 184 of the Income-tax Act, 1961:

o    (1). Firm to be assessed as firm

o    (2). The firm, if it so decides, can give remuneration to its partners (working partners only) and  interest on loan and capital of all the partners.

o    (3). Assessment when section 184 not complied with [Section 185]

o    (4). In the First Assessment Year:

o    (5). In the Subsequent Assessment Years:

·         3.   Deduction Allowable on account of Remuneration and Interest to the Partners of the Firm (including Limited Liability Partnership-LLP)

·         4.   Set Off and Carry Forward of Losses of Firms

o    Carry Forward and Set Off of Losses under any head in case of change in Constitution of Firm [Section 78]:

§  Treatment in case of change in Constitution of Firm will be as follows:

·         5.   Computation of Total Income of Firm (including Limited Liability Partnership)

 

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