In: Finance
Aggregate theory of the partnership is a theory which will be stating that partnership does not have a separate legal existence such Corporation so aggregate theory of the partnership will be believing that partnership is only the totality of the partner who make it up.
Entity theory of the partnership will be advocating that partnership is a a separate entity and it is having a separate existence apart from the members of the organisation. This type of theory will be advocating that partnership is a seperate which can be having a separate legal existence and partnership will be held accountable in case of any matter.
It can be exampled that under Taxation rules under entity theory, will be taxing the the income of the partnership in the hand of the partnership, and it will also with treating as expenses and other directions allowable in the hands of partnership as well because it treat it is a separate.
while in aggregate theory all the income which are accruing to the partnership will be taxed in the hand of partners and all the deductions are to be made in the hands of the partners as well.