Capital contribution in Firm

While the partners use the book value for their capital gains calculation, the firm itself must be cautious regarding the recorded value.

If the partnership firm records the plot of land in its books at a value that is lower than the ready reckoner/stamp duty value by more than the permissible limit (usually ₹50,000 or 10% of the consideration), the difference may be taxable in the hands of the firm under Section 56(2)(x) as "Income from Other Sources" for receiving a property for inadequate consideration.

Thank you sir, 

But if stamp duty value is high then firm will record that value and same value would be sale consideration for partners I guess 

Thanks :)

Yes. The transfer of the land by the partners to the firm as a capital contribution is covered by Section 45(3).

•  Each partner will have capital gains.
• The recorded value in the books of the firm (as a credit to the partners' capital accounts) is considered as the sale consideration for calculating capital gains.
• The firm will generally take the asset at the same value as its cost in the books.
• Also see the effect of Section 50C if the stamp duty/ready reckoner value is more.

It is recommended that a proper valuation and documentation be carried out before the transfer.