VIJAYNARAYAN (FREELANCE EDU CONSULTANT) 16 July 2011

Denial of profits - Legality

Partership Firm ( registered ) shows Profit - in the audited balance sheet - and also files Income-tax return accordingly.

However the Firm does not pay the share in Profits as per the Deed to the Partners. One Partner retires and the retirement is also notified / registered. The retiring Partner claims his share in Profits for the years he was a Partner. He gets a reply saying that ," actually the fim is under LOSS, but we showed Profits & filed the RETURN".

Is the stand taken by the firm , " LEGALLY TENABLE ", since the Firm has shown PROFITS to Govt

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3 Replies

KAMARAJ BHARATHY G (ADVOCATE- HIGH COURT) 17 July 2011

As per law once the partnership firm shows profit and paying tax for that, then the firm cannot say anything against its statement. Hence, the retired partner may file civil suit for recoverty of money and he may file ciminal complaint for his former partners cheating.

KAMARAJ BHARATHY G

VIJAYNARAYAN (FREELANCE EDU CONSULTANT) 18 July 2011

Dear Mr. Kamaraj

Thanks for the response

I will be obliged if the relevent sections of the civil law & the criminal law are , "quoted", as that will make it very easy to file the suit under these sections

regards