captal gain

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vinay (Querist)
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29 October 2010 Amount receivable from an old partner when he terminates his partnership is now written off by the firm, whether capital gain arises on such transaction? whether it is a relinquishment of right?

taxindiaconnect

taxindiaconnect (Expert)
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29 October 2010 This is a amount deductible in the hands of firm and taxable in the hands of the partner who is leaving the firm.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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29 October 2010 If it is a debit balance in the capital / current account of the partner and if that debit balance is written off in the accounts of the firm, then that wrote off amount is not an allowable expenses in the hands of the firm. Like wise, the said amount is a liability in the hands of the partner and hence it is not a relinqishment of an asset hence no capital gains.

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