Taxability of a person to whom the profit share is assigned

[NARESH GUPTA]

I want to know the tax liablity of the person if he assign his share of profit from a partnership firm in which he is a partner to any other person and 2nd case is if he transfer his share in partnership firm to another partnership with that third person.

AI Summary

Tax Implications of Transferring Partnership Profit Share: Section 56 May Apply if Transfer is Without Consideration. A forum participant inquired about the tax implications when a partner assigns or transfers their profit share in a partnership firm to another person or another partnership. The response clarified that the tax liability depends on the nature of the assignment. If the transfer is voluntary or by overriding title, it may have different tax consequences. Generally, there is no tax liability for the original partner transferring their share. However, if the transfer occurs without consideration, it may be taxable for the recipient under section 56, unless they are a relative.