Comparison of section 327 "Change in constitution of a firm." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cument. Background & Scope Statutory hooks: The provision is placed as Clause 327 under the Bill heading "Change in constitution, succession and dissolution" and references assessments u/ss 270 and 271 (these sections are cited as the assessment provisions triggering the rule). The scope covers the treatment of a partnership firm for assessment purposes "where at the time of making an assessment u/s 270 or 271, it is found that a change has occurred in the constitution of a firm." Definitions: The clause sets out, for the purposes of the provision, what constitutes a "change in the constitution" of a firm by enumerating three circumstances. No separate definitions of "firm", "partner", "admitted", or "ceased" are provided in the clause it....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... partner when a new partner is admitted signals the legislature's concern to distinguish reorganisations that preserve firm continuity from complete transfers of business or successor entities. The death-dissolution exception indicates that a firm's dissolution by reason of a partner's death should not be treated as a partner-cessation under clause (a) for assessment allocation purposes. Exceptions/Provisos The only proviso is that sub-section 2(a) does not apply where the firm is dissolved on the death of a partner. There are no other carve-outs, thresholds, temporal rules, or conditions in the clause. The clause does not state whether other forms of succession, amalgamation, or assignment fall within its scope; nor does it a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ovision. It does not reference other provisions dealing with succession, transfer of business, or partner liability. Potential interpretive issues may arise in relation to: * Determination of the "time of making the assessment" - the clause does not define when assessment is "made" for these sections (for example, original assessment versus reassessment), so interplay with procedural provisions in sections 270/271 and their rules may be required to fix the temporal point. * Whether cessation by retirement, retirement by agreement, insolvency of a partner, or transfer of a partner's interest outside formal dissolution falls within clause (a) - the clause lists cessation generically; further statutory or case law guidance would be req....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ely to arise is on interpretive clarity: the Bill's separate enumeration may be marginally clearer when construing whether ceasing and admission are distinct events; the consolidated Act version ties cessation and admission together in the same limb. There is no express change to scope, exceptions (other than the death dissolution carve-out), or the operative assessment rule. * Other textual elements: Both texts contain identical provisions for assessment timing (assessment to be made on the firm as constituted at the time of making assessment) and identical proviso excluding dissolution on death from the operation of the partner-cessation limb. No additional conditions, thresholds, or procedural rules are present in either text. Pra....