30 April 2009
A Partnership firm revalued its land. The difference between the revalued amount and the cost as per books of accounts were credited to the capital account of the partners. Subsequently two more partners were admitted into the partnership and the old partners withdrew the entire capital and retired from the partnership. The partnership firm continued as a going concern with the two newly introduced partners. Whether this transaction results in any income tax liability for the partnership firm as well as for the retired partners.
30 April 2009
There will be no liability in case of firm as the land has not been sold by the firm.. and cost of acquisition will remain same for the firm.. This transaction will be covered under sec. 188 and separate assessment will be made for both the firms.
Please note that here sec 45(4) will not apply as there is no distribution of assets.
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