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Capital gains

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Querist : Anonymous

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Querist : Anonymous (Querist)
03 May 2016 Dear Experts one of my client who is a partner in a Real Estate partnership firm has decided to retire by taking his share from stock in trade. I want to know does it amount to Capital Gain or Business income in the hands of partnership firm? Please suggest.
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CA CMA CS Ram Pavan Kumar Melam

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CA CMA CS Ram Pavan Kumar Melam (Expert)
04 May 2016 Transfer of stock-in-trade results in PGBP not capital gains.

Section 45(4) is applicable on transfer of a 'capital assets' by way of distribution of capital assets on the 'dissolution' of a firm.

The provisions of section 45(2) does not apply for two reasons:
1) There is no transfer of capital asset; and
2) There is no dissolution of the firm.
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Rupesh Jain

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Rupesh Jain (Expert)
04 May 2016 there is tfr of assets to partner , income for firm will be under business income and taken on market value of assets given to partner.
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