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.]]

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. 1-41993).

⁴ Subs. by Act 32 of 2003, s. 69, for sub-section (5) (w.e.f. 1-4-2004).

⁵ Subs. by s. 70,ibid., for section 185 (w.e.f. 1-4-2004).

1. Section 181 and sub-heading “O.—Liability of State Governments” omitted by Act 26 of 1988, s. 36 (w.e.f. 1-4-1989). 2. Restored by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier sub-heading “A.—Assessment of firms” and sections 182 and 183 omitted by Act 4 of 1988, s. 67 (w.e.f. 1-4-1989).

C.—Changes in constitution, succession and dissolution

187.Change in constitution of a firm.—(1) Where at the time of making an assessment under section 143 or section 144 it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm as constituted at the time of making the assessment.

1*

1. (2) For the purposes of this section, there is a change in the constitution of the firm—
   • (a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change ; or
   • (b) where all the partners continue with a change in their respective shares or in the shares of some of them: 2[Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners.]