Anu Agarwal (Manager-Audits) (173 Points)
06 January 2009Can someone give me the solutionto this problem
Q.A firm XYZ had an immovable property purchased out of firm's funds of Rs.6,00,000.On March 31,1999,the property was divided among the parteners equally by making entries in the Capital accounts of the Partners.The property was subsequently sold on July 1,2006 for Rs.9,00,000.The assessing officer assesses the resultant capital gains in the hands of the firm.Discuss
Piyush Jain
(CA)
(283 Points)
Replied 06 January 2009
Anu, although i am not deadly sure, but i think as the property was divided between partners giving impact to their capital gain, it should be charged in the hands of partner itself.
on the same hand,u have to look that when the property was divided was any capital gain was impacted or not.
madhur gupta
(student/article )
(1022 Points)
Replied 06 January 2009
what do u mean from dividing asset into capital a/c of partners?
if building is standing in balancesheet of firm then firm has to pay tax on it.......
Anu Agarwal
(Manager-Audits)
(173 Points)
Replied 06 January 2009
Thank u Mr.Madhur & piyush
this is a CA Final quest
i jst typed exactly as it came in the paper
so plz help me on this
Shubhankar Limaye
(B.Com.)
(174 Points)
Replied 07 January 2009
If the partnership firm holds title to the property, then the resultant gain would be assessed in the hands of the firm only. However if the firm TRANSFERS the property to partners by way of an agreement and gets it registered, the partners individually become owners and the firm has no title to the said property. Consequently any gains arising out of transfer of that property shall be assessed in the hands of partners.
Sowmya P K
(Chartered Accountant)
(251 Points)
Replied 11 January 2009
| Originally posted by :Anu Agarwal | ||
| " | Can someone give me the solutionto this problem Q.A firm XYZ had an immovable property purchased out of firm's funds of Rs.6,00,000.On March 31,1999,the property was divided among the parteners equally by making entries in the Capital accounts of the Partners.The property was subsequently sold on July 1,2006 for Rs.9,00,000.The assessing officer assesses the resultant capital gains in the hands of the firm.Discuss |
" |
Hi Anu, i think if the firm has actually TRANSFERRED the property on March 31,1999, then capital gain arises to the FIRM on that day itself. There is 45(4) which talks abt transfer of assets by firm to its partners. Then the Fair Market Value as on 31/3/1999 will be taken as sale consideration. Consequently when the property is actually sold on 1/7/2006 the resultant capital gains arises to the partners itself.
Sulay Shah
(Article Assistant)
(54 Points)
Replied 12 January 2009
Yes I agree with Sowmya..it will the correct treatment
CA CS CIMA Prakash Somani
(Landmark Group)
(23502 Points)
Replied 12 January 2009
My logic is that when assets distributed it must have taxable int he hands of partners as only share of profit from firm is not taxable in the hands of partners. So now they becomes individual owners of the property.
So the property should be assessed in the hands of individual partners. Please correct me if i m wrong.
| Originally posted by :Anu Agarwal | ||
| " | Can someone give me the solutionto this problem Q.A firm XYZ had an immovable property purchased out of firm's funds of Rs.6,00,000.On March 31,1999,the property was divided among the parteners equally by making entries in the Capital accounts of the Partners.The property was subsequently sold on July 1,2006 for Rs.9,00,000.The assessing officer assesses the resultant capital gains in the hands of the firm.Discuss |
" |
As per question it is clear that asset has been written off by debiting capital account and crediting asset account..now sec45(4) will be applicable .
since the asset has been transfered to partners on the same day therefore fair market value will be same thus there will be no capital gain in the name of firm........
now it will be taxabe in the hands of partners
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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