Sale of business and Assets

This query is : Resolved

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A partnership firm planning to wind up its business seeks guidance on the tax implications of selling factory land and a depreciable building while retaining another rented property. Key considerations include separate valuation of land, LTCG on land, and Section 50 taxation for depreciable building assets.

Suraj

Suraj (Querist)
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07 June 2026 Dear Sir / Madam,

I want to understand the taxation part in sale of business along with factory building and land.

M/s A, 30 year old a partnership firm, owns the factory building & land at Vashi and another Gala at Vikroli, Mumbai.

Now M/s A wants to wind up its business, which is not achieving break-even now and wants to sell the factory building & land at Vashi. They were claiming depreciation on factory building and gala. Land as such not shown separately in the balance sheet. They will continue with Gala, which is given on the rent.

I want to understand how this transaction will happen? What would the taxation?

Please guide me.

Regards,
Suraj

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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07 June 2026 Land: Must be valued separately. It triggers Long-Term Capital Gains (LTCG) taxed at 12.5% because it has been held for 30 years. The firm can save tax on this portion by investing up to ₹50 Lakhs in Section 54EC bonds.

Building: Governed by Section 50 (Depreciable Assets). Since the firm is keeping the Vikhroli Gala, the block remains alive. If the sale price of the Vashi building exceeds the total WDV of the entire block, it triggers Short-Term Capital Gains (STCG) taxed at 30%. If it is less, no tax is paid, and the block's WDV is reduced.

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Suraj

Suraj (Querist)
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12 June 2026 Thank you, Aashok Kumar ji !!

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