Short term capital gain
This query is : Resolved
08 January 2013
If a partnership firm has short term capital gain from disposing off land and building from business n for the purpose of tax saving it has shown loss from business but still 3 lacs are left , so what are the other ways to save tax?
08 January 2013
If the firm has claimed depreciation on the
building in the last year, it can purchase a new building or office so as to show addition in the block of Building.
.
building in the last year, it can purchase a new building or office so as to show addition in the block of Building.
.
08 January 2013
Sir the firm is going to dissolve and it has already claimed cost of improvement on the disposed land and building so, plz suggest some more ideas
25 July 2025
Got it. Here’s a quick summary and some ideas based on your scenario:
---
### Situation Recap:
* Partnership firm has **short-term capital gain (STCG)** from selling land and building (business asset).
* Firm has shown business loss but still has a **taxable income of ₹3 lakhs**.
* Firm is going to **dissolve** and has already claimed cost of improvement on the disposed asset.
* Looking for ways to save tax on remaining gains.
---
### Important Points:
1. **STCG on Business Asset:**
* Treated as normal business income for the firm.
* Can be offset against business losses.
* If still taxable income remains, tax is payable.
2. **Depreciation & Cost of Improvement:**
* Already claimed, so no further depreciation benefit on the sold asset.
3. **Firm Going to Dissolve:**
* Limits the scope for long-term planning since business is closing.
---
### Possible Tax-Saving Ideas:
1. **Investment in Capital Assets (Sec 54F or 54EC) — Not Applicable to Firm:**
* These sections apply to individuals/HUFs, not partnership firms.
2. **Business Expenses:**
* Review if all allowable business expenses have been properly claimed to reduce taxable income.
* Any outstanding or prepaid expenses can be considered.
3. **Capital Gains Set-off:**
* Check if there are any **capital losses (short or long term)** in the firm that can be set off against STCG.
* Losses from earlier years (unabsorbed) can also be adjusted if available.
4. **Advance Tax Planning:**
* If the firm has other income, check if it can be shifted or adjusted via loans or partner’s accounts.
5. **Distribution of Income to Partners:**
* Income is taxable in the hands of the firm, but final distribution to partners may help in tax planning individually.
* However, this is applicable after the firm’s assessment.
6. **Dissolution Accounting:**
* Ensure proper accounting of assets and liabilities on dissolution to minimize tax impact.
7. **Tax Audit & Professional Advice:**
* Since firm is dissolving and capital gain involved, consult a tax professional for detailed assessment and proper tax planning for dissolution.
---
### What Not to Do:
* Avoid any artificial transactions to reduce taxable income.
* Avoid shifting income to partners improperly.
---
**In brief:** As the firm is dissolving and has already claimed improvements and depreciation, there are limited options to save tax on STCG. Careful review of all expenses, losses, and proper accounting during dissolution are key.
---
Would you like me to help draft any specific tax computation or explore any other detailed options?
---
### Situation Recap:
* Partnership firm has **short-term capital gain (STCG)** from selling land and building (business asset).
* Firm has shown business loss but still has a **taxable income of ₹3 lakhs**.
* Firm is going to **dissolve** and has already claimed cost of improvement on the disposed asset.
* Looking for ways to save tax on remaining gains.
---
### Important Points:
1. **STCG on Business Asset:**
* Treated as normal business income for the firm.
* Can be offset against business losses.
* If still taxable income remains, tax is payable.
2. **Depreciation & Cost of Improvement:**
* Already claimed, so no further depreciation benefit on the sold asset.
3. **Firm Going to Dissolve:**
* Limits the scope for long-term planning since business is closing.
---
### Possible Tax-Saving Ideas:
1. **Investment in Capital Assets (Sec 54F or 54EC) — Not Applicable to Firm:**
* These sections apply to individuals/HUFs, not partnership firms.
2. **Business Expenses:**
* Review if all allowable business expenses have been properly claimed to reduce taxable income.
* Any outstanding or prepaid expenses can be considered.
3. **Capital Gains Set-off:**
* Check if there are any **capital losses (short or long term)** in the firm that can be set off against STCG.
* Losses from earlier years (unabsorbed) can also be adjusted if available.
4. **Advance Tax Planning:**
* If the firm has other income, check if it can be shifted or adjusted via loans or partner’s accounts.
5. **Distribution of Income to Partners:**
* Income is taxable in the hands of the firm, but final distribution to partners may help in tax planning individually.
* However, this is applicable after the firm’s assessment.
6. **Dissolution Accounting:**
* Ensure proper accounting of assets and liabilities on dissolution to minimize tax impact.
7. **Tax Audit & Professional Advice:**
* Since firm is dissolving and capital gain involved, consult a tax professional for detailed assessment and proper tax planning for dissolution.
---
### What Not to Do:
* Avoid any artificial transactions to reduce taxable income.
* Avoid shifting income to partners improperly.
---
**In brief:** As the firm is dissolving and has already claimed improvements and depreciation, there are limited options to save tax on STCG. Careful review of all expenses, losses, and proper accounting during dissolution are key.
---
Would you like me to help draft any specific tax computation or explore any other detailed options?
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