TAXATION ON ACCOUNT OF SALE OF FACTORY BUILDING

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2011 IN ONE OF OUR SISTER CONCERNS WHICH IS A PARTNERSHIP FIRM HAVING THREE PARTNERS, THE BUSINESS HAS BEEN DISCONTINUED AND THE FACTORY BUILDING IS BEING SOLD. WHAT WOULD BE THE TAX IMPLICATION FOR THE PARTNERSHIP FIRM, AS WELL AS THE PARTNERS.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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11 June 2011 FACTORY BUILDING is a depreciable capital asset on sale of it the arising capital gain to the firm will be treated as short term capital gain in accordance with Section 50.
Tax liability will be borne by the firm only and partners will receive their tax free share just like share in firm's profits.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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12 June 2011 In addition to the answer no doubt it is short term capital gain but if the value of the sale value of the factory building is more then the original value then it can be taken as long term capital gain

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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12 June 2011 Yes, I support the view expressed by Mr Shyam.
The Original Cost is 500000, WDV is 100000 and it is sold for 800000,
300000 will be treated as LTCG and Rs 400000/
(to the extent of depreciation claimed) will be STCG.

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