Capital gain
This query is : Resolved
15 August 2012
One of my client is a firm.Before couple of years it has purchased a land in the name of three partners and the same is accounted in the firm balance sheet as firm's property. Now that three partners wants to take that land individually,by debiting their capital account. Question1.Whether it is possible to take the land from the firm without any registration
Question2.If question 1 is positive,whether it attracts capital gain tax U/S 45(4) of Income Tax Act?
Question 3. If question 1 is negative, in what way these matter to be dealt with in books of accounts.
Pl.answer with relevant case law if any.Urgent
Question2.If question 1 is positive,whether it attracts capital gain tax U/S 45(4) of Income Tax Act?
Question 3. If question 1 is negative, in what way these matter to be dealt with in books of accounts.
Pl.answer with relevant case law if any.Urgent
16 August 2012
My opinion about question 1: If Land is registered in name of partnership firm, at such case it is not legal to refrain from registration of land in each individual partner’s name.
Answer to Q.No.2: Yes this attracts tax under head of capital gains.
Even if land is in the name of partners (Joint holding or not) and if shown as asset of partnership firm in Balance sheet of firm tax in case of gains shall be paid. However in such cases I opine that registration is not required and book entries shall be properly affected in accounts. In case of joint holding partition of property for demarcation of boundaries.
Answer to Q.No.2: Yes this attracts tax under head of capital gains.
Even if land is in the name of partners (Joint holding or not) and if shown as asset of partnership firm in Balance sheet of firm tax in case of gains shall be paid. However in such cases I opine that registration is not required and book entries shall be properly affected in accounts. In case of joint holding partition of property for demarcation of boundaries.
Dhirajlal Rambhia
(Expert)
27 July 2023
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