Partnership firm & capital gain

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Dipti Sharma (Querist)

06 November 2015 The assesses is a Registered Partnership firm consisting of 4 partners, two of the partners had contributed a plot of land in joint ownership as part of capital, and the firm(assesses) has constructed a commercial building on the said land, the business on the firm during the last 10 years is of selling out these offices, and shops.

On 31/03/2015 the firm still has 15 offices in its balance sheet, which is shown as stock in trade, Now the partners have mutually agreed to dissolve the partnership firm, and want to distribute the remain shops among themselves, in proportion of the capital brought in... Will the firm be liable to pay Capital Gain tax, or will the partners have to pay any capital gain tax on the said offices which they get in their respective share?? pls advice

Amol S Joglekar

Amol S Joglekar (Expert)

06 November 2015 sec 45(3) and 45(4) will govern the situation so far as LAND as capital contribution is concerned.

For distribusion of "stock in trade", the firm has to show it as its income at FMV.

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Dipti Sharma

Dipti Sharma (Querist)

17 November 2015 Thanks Sir,
In the above case if the entire piece of land brought in by the two partners as contribution of Capital, has not been utilised, as the commercial building and shops were constructed only on 40% of the land, what will be the tax application for the unused barren land at the time of dissolution of the firm. The land is still in the name of the partners, will it be given back to them??
Please advice.

Amol S Joglekar

Amol S Joglekar (Expert)

18 November 2015 I think because of the WORD LAND, you are probably getting confused. Let me put it this way. The land was introduced as capital of the partners. Since the firm is engaged in the business of selling out these offices for last 10 years, the land is held as "stock in trade" by the said partnership firm.

40% of the land will go to the repective office owners, 60 % of the land is still stock in trade.

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Dipti Sharma

Dipti Sharma (Querist)

30 January 2016 Sir, if a grandfather has 30% share in a partnership firm and with the consent of all the other partners he decides to gift his share to an adult grandson what will be the consiquences of the same .... Apart from the gift deed and the new partnership deed what else is to be done? thanks

Dipti Sharma

Dipti Sharma (Querist)

30 January 2016 Please advice me on the above

Amol S Joglekar

Amol S Joglekar (Expert)

06 February 2016 gift deed and partnership deed ....that is sufficient.

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