dear sir nd frndz ,
In a partenrship firm wid 2 partners, i f1 of the partners gifts his share of partnership 2 d other partner after which the said partenrship turns out 2 b a proprietorship , does sec 45 (4) apply in dis case ?
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Deemed Capital Gain Sec 45 (4)
Replies (3)
No. There will not be any capital gain inthis case because it is the case of dissolution of the Firm.
CG will arise only if the existing aprtners carry the partnership except the retiring partner.
when partnership firm becomes a propertiership concern then there will be dissolution of firm so section 45(4) will be attracted and partnership firm shall be liable to pay tax on capital gain. for this purpose fmv of the assets shall be taken to be the full value of consideration
As per Case of ALA Trading Co (Supreme Court) if P.F is dissolved capital gain shall be attracted and for which FMV concept is used to levy capital gain
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