Tax planning

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UMESH AGRAWAL (Querist)
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04 August 2011 A, B and C are three partner running a business in name of ABC (Partnership Firm). Partners have a land in their personal name . Partners wish to put a manufacturing unit in that land in the name of partnership firm and introduce this piece of land as their capital contribution.

What is tax liabilities in hand of partners and in hand of firms.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 August 2011 Land from partners to firm, it is treated as transfer and Capital Gains may arise if in the firm's book, the valuation is taken at higher side.
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The amount credited to capital accounts of partners will be treated as sales consideration in the hands of the respective partners.

The cost of acquisition may be indexed if the land is a long term capital asset.

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