Navigating The World Of Assessing Firms And Partner Liabilities
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WEEKEND MCQ SELF CHALLENGE #13 - ASSESSMENT OF FIRMS AND LIABILITIES OF PARTNERS
Assessment of Firms and Liabilities of Partners
Dear Professional Seniors & Friends.
Welcome to this wonderful weekend MCQ self-challenge!
This weekend's challenge is on the Assessment of Firms and liabilities of partners under different circumstances having 5 MCQs to be self-answered by participants to take a challenge. The detailed answers to these MCQs shall be posted on Monday for the self-assessment of the participants. This post shall be of immense use to the participant.
Weekend MCQ 13.1: From the firm M/s ABC, Mr. Cretires on 30.06.2017, Which among the following is correct about the assessment of the firm and liability of partners for the previous year 2017-187
(A) Assessment shall be made on Firm M/s ABC and Partners A & B will be jointly and severally liable along with the firm for any tax, penalty or
another sum payable.
(B) Assessment shall be made on Firm M/S AB, and Partners A & B will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
(C) Assessment shall be made on Firm M/s ABC, and all Partners A B & C will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
(D) Assessment shall be made on Firm M/S AB, and all Partners A, B & C will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
Weekend MCQ 13.2: What if in the above question? Mr. D admits as a partner on 30.06.2017 and Mr. C did not retire?
(A) Assessment shall be made on Firm M/s ABCD, and Partners A B & C will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
(B) Assessment shall be made on Firm M/S ABC, and Partners A, B & C will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
(C) Assessment shall be made on Firm M/S ABCD, and all Partners A, B, C & D will be jointly and severally liable along with the firm for any tax penalty or other sum payable.
(D) Assessment shall be made on Firm M/s ABC, and all Partners A, B, C & D will be jointly and severally liable along with the firm for any tax.
penalty or other sum payable.
Weekend MCQ 13.3: From the firm M/s ABC. Mr. A Mr. B and Mr.C retire on 30.06.2017 and Mr.D, Mr., and Mr. F are admitted. Which among the following is correct about the assessment of the firm and liability of partners for the previous year 2017-187
(A) Assessment shall be made on Firm M/s ABC, and all Partners A, B, C, D, E & F will be jointly and severally liable along with the firm for any tax. penalty or other sum payable.
(B) Assessment shall be made on Firm M/S DEF. and all Partners A, B, C, D, E & F will be jointly and severally liable along with the firm for any tax. penalty or other sum payable.
(C) Separate assessment shall be made on Firm M/S ABC for the period 01.04.17 to 30.016.17 and on M/S DEF for the period 01.07.17 to 31.03.18 and all Partners A. B. C. D. E & F will be jointly and severally liable along with firm for any tax, penalty or other sum payable.
(D) Separate assessment shall be made on Firm M/S ABC for the period 01.04.17 to 30.016.17 and on M/S DEF for the period 01.07.17 to
31.03.18 and Partners D, E & F will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
Weekend MCQ 13.4: Which of the options is correct regarding the assessment of the firm and liability of partners for the previous year 2017-18 as per the following scenario?
M/s ABC becomes M/s DBC on 30.06.2017
M/s DBC becomes M/s DEC on 30.09.2017
M/S DEC becomes M/s DEF on 31.12.2017
(A) Assessment shall be made on Firm M/S ABC, and all Partners A, B, C, D, E &F will be jointly and severally liable along with the firm for any tax. penalty or other sum payable.
(B) Assessment shall be made on Firm M/s DEF, and all Partners A, B, C, D, E & F will be jointly and severally liable along with the firm for any tax. penalty or other sum payable.
(C) Separate assessment shall be made on Firms according to their period and all Partners A, B, C, D, E & F will be jointly and severally liable along with the firm for any tax. penalty or other sum payable.
(D) Separate assessment shall be made on Firms according to their period and all Partners D, E & F will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
Weekend MCQ 13.5: From Firm M/S AB. Mr. A retires. Which among the following is correct about the assessment of the firm and liability of
partners for the previous year 2017-182 (A) Assessment shall be made on Firm M/S AB, and Partners A, and B only will be jointly and severally liable along with the firm for any tax penalty or
another sum payable.
(B) Assessment shall be made on Partner B only, and Partners A & B will be jointly and severally liable along with the firm for any tax penalty or other sum payable.
(C) Assessment shall be made on Firm M/s AB. and Partner B will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
(D) Assessment shall be made on Partner B only, and Partner B only will be jointly and severally liable along with the firm for any tax, penalty or
another sum payable.
Answer MCQ Self Challenge # Weekend Dhamaka
As one of the best tax advisory services India, we have this post of MCQ is on the provisions relating to the assessment of firms and liabilities of partners under different circumstances.
Answer to MCQ 13.1: D)
Answer to MCQ 13.2: C)
Answer to MCQ 13.3: C)
Answer to MCQ 13.4: B)
Answer to MCQ 13.5: A)
The provisions relating to the assessment of firms and liabilities of partners under different circumstances are discussed and summarised in the following table-
Case Assessment Liabilities
Change in Constitution Section 187-Assessment shall be made
on the firm as constituted at the time of
making assessment.
of firm/(retirement, Section 188 - Assessment shall be made
according to a period of firms remaining in
force L.e.
admission of partner or
change in profit
sharing ratio)
Succession of one firm 1) Predecessor firm shall be assessed up to
the date of succession.
by another firm 2) Successor firm shall be assessed after
the date of succession.
Firm dissolved or Section 189(1)-Assessment shall be made
on the firm as if no such discontinuance or
dissolution had taken place.
business discontinued
Section 188A-All partners who during the previous year were partners shall be jointly & severally kable along with the firm.
Section 188A-All partners who during the previous year were partners shall be jointly & severally liable along with the firm
Section 189(2)-All partners who during the previous year were partners shall be jointly & severally Bable along with the firm.
Practical Analysis for MCQ 13.1 & 13.2
- These questions are the case of change in the constitution of the firm so the assessment shall be as per Section 187 Le on the firm as constituted at the time of making an assessment.
- Liabilities of partners shall be governed by Section 188A le all the persons who were partners during the previous year shall be jointly & severally liable along with the firm.
- Based on the above analysis, the correct answer to MCQ 13.1: D) Assessment shall be made on Firm M/s AB, and all Partners A, B & C will be jointly and severally liable along with the firm for any tax penalty or other sum payable.
- Correct answer to MCQ 13.2: C) Assessment shall be made on Firm M/S ABCD, and all Partners A, B, C & D will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
Practical Analysis for MCQ 13.3
- This is a case of succession of one firm by another firm so assessment shall be as per Section 188 Le.
Predecessor firm shall be assessed up to the date of succession
The successor firm shall be assessed after the date of succession
- Liabilities of partners shall be governed by Section 188A Le all the persons who were partners during the previous year shall be jointly & severally liable along with the firm
- Based on the above analysis, Correct answer to MCQ 13.3: C) Separate assessment shall be made on Firm M/S ABC for the period 01.04.17 to 30.016.17 and on M/S DEF for the period 01.07.17 to 31.03.18 and all Partners A, B, C, D, E &F will be jointly and severally liable along with firm for any tax, penalty or other sum payable
Practical Analysis for MCQ 13.4
- In this case, all the partners retire on different dates, and new partners are admitted on the same date.
- This is not a case of succession. This is a case of change in the constitution of the firm and section 187 shall apply Assessment of PY. 2017- 18 shall be made on the reconstituted firm M/s DEF and the liabilities of the partners shall be governed by Section 188A
- Based on the above analysis, the correct answer to MCQ 13.4: B) Assessment shall be made on Firm M/s DEF and all Partners A, B, C, D. E & F will be jointly and severally liable along with the firm for any tax, penalty or other sum payable because
Practical Analysis for MCQ 13.5
- In this question Partner A retires, and Firm M/s AB has to dissolve since for a firm, two partners must be there
- This is a case of dissolution of the firm so an assessment shall be made as per provisions of Section 189 means on Firm AB as if no such dissolution had taken place as discussed in the table above
Based on the above analysis, the correct answer to MCQ 13.5: A) Assessment shall be made on Firm M/s AB, and Partners A, and B only will be jointly and severally liable along with the firm for any tax, penalty, or other sum payable.
(Disclaimer: The objective of the MCQ post is just to discuss the concept. It may happen, by change of facts, the answer may be different. Please do not treat this as a professional opinion you can definitely have your own opinion.)
Sincere Regards
CA Sanjay Kumar Agrawal
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