Capital gain on firm's property

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Ramalinga H.B (Querist)
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24 December 2011 Dear Experts, Need your opinion.
X a Registered Partnership Firm having 2 partners has an industrial land. The same 2 partners have already floated a pvt ltd company. Now they want to transfer the property (land) into company's name. What is the best options with the Firm without paying much capital gain.

Mahesh Paryani

Mahesh Paryani (Expert)
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25 December 2011 Dear Ramalinga

Refer to section 47 the section read as follows
Any transfer of capital asset or intangable asset by a firm to a company as a result of succession of the firm by a company in the business carried on by the firm subjected to the following conditions

all assets and liability are transfered

all the members of the firm become the share holder of the company in same proportion

consideration received is not other than by way of shares

aggrigate share holding is more than 50% of the total voting power

only after satisfying all the conditions capital gains would be exempted.

please read the section and apply this will solve your query.

CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)
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29 December 2011 Since in the given case, Private Limited Company is already floated without succession plan, Section 47 will not apply and therefore transfer of land will attract Capital Gain

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