Immovable Properties on Dissolution of Partnership Firm

This query is : Resolved

(Querist)
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23 April 2022 A partnership firm with five partners having equal profit sharing ratio, of which one partner is a Private Limited Company and two directors of the company are also partners of the firm which owns immovable properties some of which are stock-in-trade and some are held as capital assets is going to be dissolved as four individual partners are retiring from the firm, and they will get the capital balance in the firm from firm on retirement and all the assets and outside liabilities shall remain with the only continuing partner i.e. the company.

My queries are as follows:

Whether there will be any tax liability upon the retiring partners, erstwhile firm or the sole proprietor i.e. the company ?
How will the company get legal title of the immovable properties ?
What accounting entries will be passed in the books of account of the company ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 April 2022 1 No tax liability on the retiring partners.
2 Erstwhile firm is liable for capital gains tax on the net asset value ( less liabilities) over the capital balance of the company in view of assets taken over.
In the books of the company debit assets taken over and credit liabilities and credit capital reserve the balance credit.