10 April 2008
Hello Sir My client is a partnership firm, it formed in 1995. The nature of business is buying n selling land, construction of shops, complex and trading in that. The firm had 9 partners. But in last seven years it has no trasaction so the land standing in books as stock in trade @ Rs.18,00,000/- But today the market value is Rs. 1,00,00,000/-. One of the partner is retiring and two new partners are introducing. Now the problem is capital standing in the credit of the capital account of the retiring partner is Rs. 3,50,000/- but he is demanding higher amount. so how i deal with this in income tax, as income tax does not provide computation for this as per my idea. so whether it is taxable or not. or there is no effect in the income tax. In accounts i can do this by debiting gaining partner and crediting retiring partner.
13 April 2008
amount paid to retiring partner will be adjusted in the account or remainig partners that means capital of one will get credited and others will be debited by such extra amount and that extra amount will be taxable in the hands of retiring partner, as it will be case of sale of his share in the business.
CAclubindia
