Capital gains

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 May 2016 Dear Experts one of my client who is a partner in a Real Estate partnership firm has decided to retire by taking his share from stock in trade. I want to know does it amount to Capital Gain or Business income in the hands of partnership firm? Please suggest.

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
Follow

04 May 2016 Transfer of stock-in-trade results in PGBP not capital gains.

Section 45(4) is applicable on transfer of a 'capital assets' by way of distribution of capital assets on the 'dissolution' of a firm.

The provisions of section 45(2) does not apply for two reasons:
1) There is no transfer of capital asset; and
2) There is no dissolution of the firm.