- Upon realization, all assets will be sold off in the market, and the cash realizing out of such a sale will be used for paying the liabilities. Assets or liabilities may also be taken over by the partner(s) for which the respective partner capital accounts will be adjusted by such amount.
Section 189 Dissolution of Partnership Firm
A partner may dissolve a partnership firm at any time. When any business or profession carried on by a firm has been discontinued, or where a firm is dissolved, an Assessing Officer would assess the total income of the partnership firm as if no such dissolution or discontinuance has taken place. The process of dissolving a partnership firm involves the sale or disposal of all the assets of the firm, a final settlement of all of its liabilities, and the settling of the accounts.
Goodwill is the assets of the company.
It is essential to note that for cases where the dissolution occurs through a court of law, it is only possible when the partnership deed is registered.
The primary reason for a dissolution of a partnership firm by a court of law is when the partnership firm or the partners involved participate in misconduct. Any partner or partners misbehaving with other members of the firm or not taking into consideration the signed agreement of that formed the partnership will find themselves ousted by their partners through a court case.
A partnership agreement that is registered is a document that legally binds all the partners after they have signed it. If a partner misses out on any particular clause, and even after being warned multiple times, are not heeding to it, can be dealt with at the court. The partnership firm may be dissolved through the court’s interference in such cases.