Regarding capital gain

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Sugandh Shivkumar Vyas (Querist)
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27 February 2013 An Individual purchased a land or Rs 1,00,000/-. He put it in partnership firm (Land Value 2,00,000 on that date). After some year he withdrew his property from firm (Land Value - 4,00,000 on that date).
Later he sold the property at Rs. 7,00,000.

What will be the position of income tax under capital gain. Please explain with relevant section and case laws,if any.

Thanks in advance

CA Mahavir Shah

CA Mahavir Shah (Expert)
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27 February 2013 Capital Gain when Land transferred to firm :
Rs.1 Lac (2Lac - 1Lac).

Capital gain When property Sold :
Rs. 3 lacs (7 Lacs - 4 Lacs).

Sugandh Shivkumar Vyas

Sugandh Shivkumar Vyas (Querist)
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27 February 2013 But when he put the land in firm he did not get any consideration then how gain can b 1 lac as u computed above ?

Sugandh Shivkumar Vyas

Sugandh Shivkumar Vyas (Querist)
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27 February 2013 he invested it as his capital.

CA Mahavir Shah

CA Mahavir Shah (Expert)
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27 February 2013 As per Sec 45(3), when Partner transfers capital asset than it is presumed that its value is as written in books of partnership firm.

And as per Sec 45(4), when partnership firm distributes assets its market value will be considered as Sales value.

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