Spv

Dear Vijaykumar,

you can enter into a tripartite agreement involving the partnership firm,the owners and the property developers.Make sure all the various clause and the liabilities are properly mentioned in the agreement - duly attested by witnessess.

Dear Vish,

Thanks for yr response.

There is no need for a separate spv as that shall be an extra burden. But if trnsaction is huge you may incorporate a separate entity.

 

Yes, partnership firm may enter into an agreement with a company for taking up an assignment provided the agreement is signed by the duly authorised partner in this behalf. 

Pl clarify possibility of a company and a partnership firm jointly taking up a business under agreement.

The firm and company can definietly enter into an agreement duly executed and adequately stamped for taking up business. No need to form a SPV

In my view, an SPV will be a better option though it will be a longer route if the engagement is of longer duration. A simple agreemnent may lead to taxation problems later on.

@ Mr. Sanjay Kumar : could you please throw some light over the taxation problem which may arise in future.

@Mr.Manish Singh. At this stage, two problems can be anticipated. One is appropriation of income for taxation purposes and carry forward of losses particularly if the arrangement is of long term. If there is a SPV, these problems will not arise because they will be off the balance sheet of the company & partnership..

However, in case of a company and a partnership, the income against an arrangement/agreement will have to shown as "Income from other sources". This will give an opportunity to the Assessing Officer to meddle further deep in the agreement/arrangement to assess whether the income shown is correct or not. This will cause hardships to the assessee. Further, will the AO allow to set-off the losses against the agreement/arrangement cannot be said in advance because he may not accept the agreement as extention of the same business/company.

@ Mr. Sanjay....That will be the inome from business under the IT Act. please clear your doubts.