Section 184(2) — the law in short
What the courts have decided on section 184(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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M/s Bhaskar & Co v CIT
High CourtHelps departmentHigh Courts differ
Our firm was a registered firm before 1993. Must we still produce a certified copy of the deed to be assessed as a firm?
Yes. The Kerala High Court held that even a firm which enjoyed registration up to assessment year 1992-93 must furnish a certified copy of the instrument of partnership to be assessed as a firm for any year from 1993-94 onwards, and that the consequence of non-production is disallowance under s.185 of interest, remuneration and bonus paid to partners. Once the status is granted on that footing, s.184(3) carries it forward without further production until there is a change in constitution, when s.184(4) requires the revised instrument with the return. On the facts the Court gave a limited concession, remitting the matter for verification and directing that status as a firm be granted as a special case if the certified copy had in fact been produced when the assessment was taken up.
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Statutory position — sections 184 and 185: what a firm loses when it is not assessed as a firm
CBDT Circulars & InstructionsCuts both ways
The AO has invoked section 185 because of a defect in the partnership deed filed with our return. What exactly do we lose, and does the partner get any relief?
The firm loses every rupee it paid its partners. Section 185 provides that where a firm does not comply with section 184 for any assessment year, it is so assessed that no deduction by way of interest, salary, bonus, commission or remuneration to any partner is allowed in computing its business income. Section 184(5) imposes the same consequence where there is a section 144 failure. The partner is not taxed on the same amounts, because both provisions end by saying those sums are not chargeable under clause (v) of section 28.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.