A new partnership firm in going to be formed to carry on warehousing business. Now a partner wants to introduce his land which he got recently registered in his own name at Rs. 10,00,000/- into the to be formed partnership firm as his capital contribution at Rs. 10,00,000/-. Can he do so or will it invoke Section 45(3) and he will be charged with Capital Gains tax in his own hand.
Kindly suggest if there will be any Capital Gain implication if he contributes land at the same value in which he got it registered or if there is any other way out to avoid any tax.
20 October 2016
Firstly, if the firm has to become the owner of the land then the transfer has to happen from partner to the firm. This will involve registration (once again). Since the property was registered recently for 10 lacs, I suppose it will be again registered for the same value. If you record the asset at Rs.10 lacs, then you will comply both Section 45 (c) and 50 C and there will be no capital gain tax.
20 October 2016
Partner will not transfer the land through any registered deed, in the partnership deed it will be mentioned that Mr. X, the partner is introducing land of Rs. 10,00,000/- as his capital contribution.
CAclubindia
