04 June 2012
A partnership firm was formed on 11th April, 2011 which took over all the assets and liablities of a proprietorship firm of the same name. The proprietor of the firm held 25% share in the partnerhsip firm.
Is the proprietor of the firm be liable to pay capital gains tax under the transfer of such assets on 11th April.
CAN HE BE REQUIRED TO PAY TAX UNDER SLUMP SALE OR UNDER OTHER CATEGORY OF CAPITAL GAIN. I.E. IS SLUMP SALE APPLICABLE ON TRANSFER OF ALL THE ASSETS AND LIABILITIES BY A PROPRIETORSHIP FIRM TO PARTNERSHIP FIRM.
ALL THE ASSETS OF THE PRORPRIETORSHIP FIRM ARE DEPRECIABLE IN NATURE.
YOUR VALUABLE SUGGESSTIONS WOULD THROW MORE LIGHT ON THE TOPIC?
05 June 2012
1. Capital gain shall arise on such transfer. 2. The sale consideration shall be the amount recorded in the books of the firm. 3. Section 50B (slump sale) will be applicable if individual values are NOT assigned to the assets and a lump sum amount is received from the firm for the business. 4. Normal capital gain shall be computed if values are assigned to individual assets. 5. If values are assigned to individual assets, then Section 50 shall be applicable for depreciable assets.
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