Retirment of partner

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amit surana (Querist)

24 April 2012 One partner retire from the partnership and received 18 lakhs.

the firm formed in 1990 and they purchased a property and their is no business carried out in that firm .

The market value of the asset is 2.5 crore and firm purchased the same in 1990 for 12 lakhs .

the initial capital of the partner is 4 lakhs for 1/3 share.

what is the capital gain tax and other tax on retiring partner.how to calculate the same .as his share is paid by new joining partner to him.

has we require to take market value of the asset.

pls suggest the correct treatment.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

24 April 2012 As I have seen , the property is registered in the names of the partners. As the firm has not conducted any business and the outgoing partner is receiving Rs 18.00lac, against investment of Rs. 4.00 lac, in such a case it is clear that he is receiving the amount against his share in the property.
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The retiring partner has to transfer his share in the property into the name of the new joining partner.
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At this juncture, the Stamp Duty Officer will take into account the market value of the 1/3rd share, and Section 50C will start to play its role. The sales consideration of the property , will be the value taken by the Registrar.
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In this way, the partner may have to pay almost entire receipts from firm towards the payment of capital gain Tax.
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However, views of experts on this issue may be envisaged.
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amit surana

amit surana (Querist)

05 May 2012 can any expert have any other view on such taxation.

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