Applicability of section 45(3) & 50C

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Drupad Patel (Querist)
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14 July 2011 there is a co-owner of N.A.land. they all wanted to transfer this land in to stock in trade & wanted to make residential society.
they created new firm for this.& they recorded this land at cost in each owner's capital a/c.
this land is purchased on 2008.
pls let me know what is the tax treatment.??

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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14 July 2011 It is assumed that the land is held for less than 3 years before transferring into the firm . It is a short term capital asset.

In case the property is recorded at book value there is no gain to the co-owners.
However they have to show the zero capital gain in their respective returns.

In case the property is Long Term , indexation benefit will be allowed and every co-owner will have LT Capital Loss in their hands.

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