A partnership firm can be dissolved by a partner at any point of time. In case, the partnership firm is either dissolved or the business is discontinued, then an Assessing Officer will assess the total income earned by the firm as if no dissolution of the partnership firm took place. The procedure for dissolution of a partnership firm consists of selling of all the assets of the firm, settling of accounts and a final settlement of the liabilities of the firm. In this blog, we will know more about the Dissolution of a Partnership firm under Section 189 of the Income Tax Act.
In case of dissolution of partnership firm, any individual who is present at the ending of a partner and the legal representative of a person who is dead, will be combinedly liable for the penalties, tax amount or any other sum that is payable.
The discontinuation or dissolution of partnership firm can be performed in any of the ways that are listed below:
All the liabilities of partners of a particular firm end after the firm has been declared as dissolved but the partners are responsible for any occurrences before the partnership has been dissolved. However, all the partners who have been declared as insolvent or have passed away are free from all the liabilities once the dissolution of the partnership has been performed.