Section 45(4a) of income tax act

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This discussion explores whether a partner receiving more money than their capital balance upon retirement from a firm triggers a capital gain under Section 45(4A) of the Income Tax Act. Experts advise that such excess receipts are typically treated as capital receipts, not capital gains. The thread aims to clarify the nature of these receipts and potential tax implications.

CA VIVEK JHA

CA VIVEK JHA (Querist)
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24 May 2021 Dear Experts,
Please advice is there any capital gain if partner received excess money than his capital balance which comes in firm at the time of retirement????

If there is capital gain then please suggest whether it will be short term or long term capital gain??

In case of long term capital gain what will be the period of holding for long term capital gain and for which asset period of holding will be considered??

Can the firm take benefit of indexation in case of long term capital gain???

CA VIVEK JHA

CA VIVEK JHA (Querist)
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31 May 2021 Dear Experts,
Please share your opinion.