sale of asset by firm

This query is : Resolved

ARVIND JAIN (Querist)
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01 July 2011 The firm has sold the shop chargeble to depreciation. Can it invest proceeds to buy another asset shop/office/flat and claim exemption to avoid short term gain.Can partner transfer asset to firm.Is it to be done by book entry at market value or by registered document.The firm is not registered with registrar of firms and is of close family member mother /son.Can they jointly own property and transfer to firm or buy through firm funds.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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01 July 2011 Q-1. Since the assets on which depreciation has been claimed are sold. Short term Term Capital Gain shall be applicable and you cannot avoid saving of tax by investment in other assets. If the consideration received is more than the original value then Long Term for above the original Cost and short term up to original cost shall be applicable. If you have sold one asset in the same block and purchased another asset on the same block then no tax shall be payable but the value of the new asset shall be reduced by the profit earned by the firm.

Q-2. Yest Partners can transfer the assets to the firm but they have to transfer the same at the market value and have to pay the Capital Gains. Either Short term or Long Term as applicable to them.

Q-3. Non registration of firm with Registrar of Firm prohibits the firm to file any case above Rs. 100/- and the firm does not get legal status in the eye of the law. Hence, it is advisable to get your firm registered. The outsiders can file suit both on the firm as well as partners when the firm is not registered.

Q-4. Joint ownership is permitted but not at the cost of the firm. If joint ownership property is purchased then all the parties have to invest their share by way of capital.

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