09 January 2012
Dear Experts, one of my client firm,in real estate business, there is some stock of land, now the partners decided to dissolve the firm, and decided to distribute the stock of land among the partners.
Now,will the capital gains tax attract or not?, the book value of land as on date is Rs.50 lacs, now the fair market value of same is Rs. 1.5.crore,
09 January 2012
In case of dissolution capital gains arises only in the case of transfer of capital assets. It is stock in trade for the firm and the profit arising if any on such sale/ transfer will be treated as business income in the hands of the firm. Section 50C will also not apply for stock in trade.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
09 January 2012
Sir, can the firm be advised to continue and trf. the stock of land to the partners?
10 January 2012
Try to distribute the assets on book values to avoid any Business Profits. Once transferred in the hands of partners such shall become their capital asset.
They can individually sell their part and cost of acquisition shall be taken the amount on which they got it from firm.
17 April 2013
If the Partnership is at will and partners desires to continue some assets in the firm only, it is indicative that the firm is still in continuation. .