Introduction of land as capital introduction in the firm

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C.A. Anthony C D'souza (Querist)
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15 January 2015 Four individuals have purchased a land in individual names (together in a single deed). Now they want to form a partnership firm and construct a residential complex and sell it. Queries are;

1) After amendment to sec 50C in 2009, there will be capital gain in the hands of partners for introduction of land as capital in the firm taking 50c value as sale consideration. Is it correct????

2) Will there be any stamp duty for a clause in the partnership deed as introduction of land as capital?

3) Will there be any problem while selling the property in firms name as the land is purchased in the individuals name?

4) Lastly can all the individuals give a contract to the firm where they are the partners for building construction and sell it in the individual capacity? What will be the income tax aplicability?

Amol S Joglekar

Amol S Joglekar (Expert)
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15 January 2015 01. Read section 45(2)...The gain will be taxed accordingly...

02. No need to pay stamp duty as all the 4 persons are jointly owning the land...and the FIRM is not separate from these 4 persons.

03. There should NOT be any problem so long as you are disclosing the same in the RECITAL of every agreement to sale with the prospective customer.

04. If they so desire, they can very well give a DEVELOPEMENT contract to the firm consisting of these 4 persons.

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C.A. Anthony C D'souza

C.A. Anthony C D'souza (Querist)
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16 January 2015 I wanted to know whether sec 50c is applicable for introduction of Land as Capital in the firm ?

Amol S Joglekar

Amol S Joglekar (Expert)
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19 January 2015 No it is not applicable. The value at which the partners record the said conversion is to be taken

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