Capital gain on transfer of property

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CA. SUNIL KR. KHANNA (Querist)
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01 April 2011 A ( propreitor) transfer all its propreitor ship firm's assets(including land & Building) & liabilites to a partnership firm (having A, B, C, as partner)in which A holds more than 50% of share. [ B & C are son of A]
After the period of 2 years A expired and other partner (B&C) continue the business.

Quirey: whether any capital gain tax liability arises.if yes comutation of consideration.

prasad

prasad (Expert)
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01 April 2011 there are three questions in ur query.

first - A transfers his property to Firm. for 50% share.

Its not a slum sale, hence cannot take the benefit U/S 50C.

A is liable for capital gains when he transfers his assets to the firm to the extent of 50%.

The 50% net asset value will be cost and 50% market value of net assets will be consideration on which he has to pay capital gain tax in the year the firm is formed and assets and liabilities are transferred.

Now after two years A dies and his share is taken over by the remaining partners (B & C) who are legal heirs of the demised partner-A (Provided A do not have any other legal heirs)

CA. SUNIL KR. KHANNA

CA. SUNIL KR. KHANNA (Querist)
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04 April 2011 since A who has transferred the property and holding more than 50% share how the same is treated as transfer of assets in respect of capital gain.

the other point is that since A demised before 5 years of transfer what is the Capital gain tax position if B & C (son of A)who are the remaining partner

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