Ltcg on sale of property of partnership firm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 November 2013 Assessee "A" is individual and partner in firm 'ABC'. In the year 2005-06 the firm ABC has purchased the immoveable property. For the sake of convenience purchase agreement was made in the name of one of its partner ie assessee "A". Firm had made investment in it and shown as investment in its balance sheet. The property is sold by firm in the year 2010-11, filed IT return after paying LTCG Tax.
"A" case is under AIR scrutiny for this property sold. Submission is made with all related papers and documents, stating property was held on behalf of firm and firm has paid the tax on it. But ITO insisted that since party to sale is "A" he is liable for LTCG Tax.
What is remedy, can any one guide.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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16 November 2013 Dear Kamlesh,

The assessing officer may very well be right in this case. In a very interesting case, which is very similar to the facts of yours, the firm claimed that the individual partner is liable to pay tax but the AO insisted that Firm is liable. The Chennai bench of ITAT ruled in favor of the assessee and said that in absence of conveyance deed in favor of the firm or any clause in the conveyance stating the the asset is being bought on behalf of the firm, the individual shall be liable to pay tax on such sale of property.

you may refer:

http://indiankanoon.org/doc/181285205/

So what you need to do is that you should be able to differentiate from the facts of this case.

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