Income Tax Act, 1961
Section 8: Subs. by Act 27 of 1999, s. 68, for “during the previous year” (w.e.f. 12000).
8. Subs. by Act 27 of 1999, s. 68, for “during the previous year” (w.e.f. 12000).
630
Explanation.—For the purposes of this section, the expression “know-how” has the meaning assigned
to it in section 35AB.]
1***
CHAPTER XVI
SPECIAL PROVISIONS APPLICABLE TO FIRMS
2[A.—Assessment of firms
182. [Assessment of registered firms.]—Omitted by the Finance Act, 1992, (18 of 1992), s. 65
(w.e.f. 11993).
183. [Assessment of unregistered firms.]—Omitted by the Finance Act, 1992, (18 of 1992), s. 65
(w.e.f. 11993).]
3[184. Assessment as a firm.—(1) A firm shall be assessed as a firm for the purposes of this Act, if—
(i) the partnership is evidenced by an instrument; and
(ii) the individual shares of the partners are specified in that instrument.
(2) A certified copy of the instrument of partnership referred to in sub-section (1) shall accompany
the return of income of the firm of the previous year relevant to the assessment year commencing on or
after the 1st day of April, 1993 in respect of which assessment as a firm is first sought.
Explanation.—For the purposes of this sub-section, the copy of the instrument of partnership shall be
certified in writing by all the partners (not being minors) or, where the return is made after the dissolution
of the firm, by all persons (not being minors) who were partners in the firm immediately before its
dissolution and by the legal representative of any such partner who is deceased.
(3) Where a firm is assessed as such for any asses9+sment year, it shall be assessed in the same
capacity for every subsequent year if there is no change in the constitution of the firm or the shares of the
partners as evidenced by the instrument of partnership on the basis of which the assessment as a firm was
first sought.
(4) Where any such change had taken place in the previous year, the firm shall furnish a certified
copy of the revised instrument of partnership along with the return of income for the assessment year
relevant to such previous year and all the provisions of this section shall apply accordingly.
4[(5) Notwithstanding anything contained in any other provision of this Act, where, in respect of any
assessment year, there is on the part of a firm any such failure as is mentioned in section 144, the firm
shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or
remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in
computing the income chargeable under the head "Profits and gains of business or profession" and such
interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax under clause
(v) of section 28.]
5[185. Assessment when section 184 not complied with.—Notwithstanding anything contained in
any other provision of this Act, where a firm does not comply with the provisions of section 184 for any
assessment year, the firm shall be so assessed that no deduction by way of any payment of interest, salary,
bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such
firm shall be allowed in computing the income chargeable under the head “Profits and gains of business
or profession” and such interest, salary, bonus, commission or remuneration shall not be chargeable to
income-tax under clause (v) of section 28.]]
1. Section 181 and sub-heading “O.—Liability of State Governments” omitted by Act 26 of 1988, s. 36 (w.e.f. 11989).
2. Restored by Act 3 of 1989, s. 95 (w.e.f. 11989). Earlier sub-heading “A.—Assessment of firms” and sections 182
and 183 omitted by Act 4 of 1988, s. 67 (w.e.f. 11989).
3. Subs. by Act 18 of 1992, s. 66, for “sub-heading “B.—Registration of firms” and sections 184, 185 and 86” (w.e.f. 1
1993).
A firm shall be assessed as a firm for the purposes of this Act, if—
the partnership is evidenced by an instrument; and
the individual shares of the partners are specified in that instrument.
A certified copy of the instrument of partnership referred to in sub-section
shall accompany
the return of income of the firm of the previous year relevant to the assessment year commencing on or
after the 1st day of April, 1993 in respect of which assessment as a firm is first sought.
Explanation.—For the purposes of this sub-section, the copy of the instrument of partnership shall be
certified in writing by all the partners (not being minors) or, where the return is made after the dissolution
of the firm, by all persons (not being minors) who were partners in the firm immediately before its
dissolution and by the legal representative of any such partner who is deceased.
Where a firm is assessed as such for any asses9+sment year, it shall be assessed in the same
capacity for every subsequent year if there is no change in the constitution of the firm or the shares of the
partners as evidenced by the instrument of partnership on the basis of which the assessment as a firm was
first sought.
Where any such change had taken place in the previous year, the firm shall furnish a certified
copy of the revised instrument of partnership along with the return of income for the assessment year
relevant to such previous year and all the provisions of this section shall apply accordingly.
4[
Notwithstanding anything contained in any other provision of this Act, where, in respect of any
assessment year, there is on the part of a firm any such failure as is mentioned in section 144, the firm
shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or
remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in
computing the income chargeable under the head "Profits and gains of business or profession" and such
interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax under clause
of section 28.]
5[185. Assessment when section 184 not complied with.—Notwithstanding anything contained in
any other provision of this Act, where a firm does not comply with the provisions of section 184 for any
assessment year, the firm shall be so assessed that no deduction by way of any payment of interest, salary,
bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such
firm shall be allowed in computing the income chargeable under the head “Profits and gains of business
or profession” and such interest, salary, bonus, commission or remuneration shall not be chargeable to
income-tax under clause
of section 28.]]
1. Section 181 and sub-heading “O.—Liability of State Governments” omitted by Act 26 of 1988, s. 36 (w.e.f. 11989).
2. Restored by Act 3 of 1989, s. 95 (w.e.f. 11989). Earlier sub-heading “A.—Assessment of firms” and sections 182
and 183 omitted by Act 4 of 1988, s. 67 (w.e.f. 11989).
3. Subs. by Act 18 of 1992, s. 66, for “sub-heading “B.—Registration of firms” and sections 184, 185 and 86” (w.e.f. 1
1993).