Capital contribution of land by a partner in partnership firm

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Prabhpreet Singh Sheetal (Querist)

04 December 2015 If stock in trade (land) is to be contributed as capital contribution as a partner in partnership firm, at what value should it be transferred :- a) book value or b) guideline value ?And what are the tax implications ?

Amol S Joglekar

Amol S Joglekar (Expert)

04 December 2015 sec 45 (2) of Income tax. Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset

https://www.incometaxindia.gov.in/Pages/acts/income-tax-act.aspx

Prabhpreet Singh Sheetal

Prabhpreet Singh Sheetal (Expert)

04 December 2015 Sir, Section 45(2) speaks for CAPITAL ASSET. Whereas, my query is for contribution of land held as STOCK IN TRADE by the partner which he wishes to contribute in the partnership firm.

Prabhpreet Singh Sheetal

Prabhpreet Singh Sheetal (Expert)

04 December 2015 Sir, section 45(2) speaks for CAPITAL ASSET. Whereas , my query is for contribution of land held as STOCK IN TRADE by the partner which he wishes to contribute in the partnership firm. Whether the provisions of section 43CA will apply since it is held by the partner as STOCK IN TRADE ?

Amol S Joglekar

Amol S Joglekar (Expert)

05 December 2015 please..... dont mess up the words.

In query, you yourself wrote :" if stock in trade (land) is to to be contributed as CAPITAL CONTRIBUTION as a partner in partnership"

What is the truth? Please dont get confused with legal language....tell me what is your query in layman's terms, please.

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