Change of proprietorship
Saikat Sen
(Querist) 06 July 2012
This query is : Resolved
Dear Sir/Madam,
Is it possible to change the proprietor of a proprietor firm?or after the death of a proprietor of a particular proprietory firm is it legally possible to carry the same business in the name of same proprietorship firm by another proprietor? & previous balance sheets capital,stocks & others have been carring forward in the balance sheet of
a new proprietor?
Thnks & Rgrds,
Saikat
sanjeev murthy desai
(Expert) 07 July 2012
Yes it is possible after demise of proprietor his legal heir only get such right. Third persons cannot run the same business in the same name style.
R Trivedi
(Expert) 07 July 2012
The question is can the liability of X can be transferred to legal heirs ? In absence of clear consent by legal heirs, it is not.
A proprietorship firm is nothing but an individual working in different name, even the Income Tax returns are in the name of proprietor. Once the proprietor is dead this firm looses its existence. Legal heirs are also would like to keep the firm if it is liability free (or in positive), once the proprietor expires, the person who wishes to continue (the LR only) should immediately inform the statutory bodies like (Sales Tax, Excise, Bank etc) for continuation under him.
H.M.Patnaik
(Expert) 08 July 2012
After demise of Proprietor of a Sole-proprietorship firm, the interest in the property of the firm automatically devolves on the Legal heirs of the Proprietor irrespective of the consent of the said Legal heirs to take over the same.
However, the Legal heirs are free to continue business in the same name at their discretion. The fact that the Income tax return covering business of the said firm was being filed in the individual name of the Proprietor is not going to create any
impediment in continuance of business or filing of Income tax return by the present holders.It is important to keep in mind that upon death of the Proprietor , it is the duty of the Legal heirs to immediately intimate the statutory authorities of the event.
