What is the procedure of Assessment when section 184 not
complied with? What is change in constitution of a firm?
What is succession of one firm by another firm? Section 185,
187 and 188 of Income Tax Act 1961
Assessment when section 184 not complied with, Change in
constitution of a firm and Succession of one firm by another
defined under section 185, 187 and 188 of Income Tax Act 1961. Provisions under these Sections are
Section 185 of Income Tax Act "Assessment when
section 184 not complied with"
Section 185. 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.
Section 187 of Income Tax Act "Change in
constitution of a firm"
187. (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
(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 :
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.
Section 188 of Income Tax Act "Succession
of one firm by another firm"
Section 188. Where a firm
carrying on a business or profession is succeeded by another
firm, and the case is not one covered by section 187,
separate assessments shall be made on the predecessor firm
and the successor firm in accordance with the provisions of