India: U.S. limited partnership may be a company for Indian tax purposes if taxed as separate entity in United States (tribunal decision)
U.S. limited partnership could be a company for Indian tax purposes under U.S. treaty.
The Mumbai Bench of the Income-tax Appellate Tribunal held that a U.S. limited partnership (USLP) could be treated as a “firm” or “company” for Indian tax purposes under the U.S.-India income tax treaty—which would determine the applicable due date for filing its tax return and, consequently, its eligibility to carry forward short-term capital losses (STCLs)—if it is treated as a body corporate or taxed as a separate entity in the United States.
The tax authority denied the USLP’s carryforward of STCLs on the ground that the USLP’s tax return was filed after the prescribed due date applicable to a firm. The tribunal held that, prima facie, the taxpayer could not be treated as a firm in India as the Income-tax Act, 1961 refers only to firms registered in accordance with the Indian Partnership Act, 1932 or the Limited Liability Partnership Act, 2008. However, the USLP could qualify as a company for Indian tax purposes under the U.S. treaty if under the relevant law (in this case, the law of the State of Delaware), it is treated as a body corporate or taxed as a separate entity.
The case is: Pabrai Investment Fund IV, L.P. v. ADIT (ITA No. 637/Mum/2025).
Read an August 2026 report prepared by the KPMG member firm in India