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capital gains

Tax planning 554 views 1 replies

gkpani

chartered Accountant

37 Points Joined October 2008

while dissolution of firm immovable property sharing between the partners capital gain treatment

my clint is partnerhsip firm one of the partner is bringing his share of capital by wasy of land and the firm is constructed the building and the firm having a retail trade, rent collected on building is treated as a business income and not claimed depreciation so that my clint is taking interest on capital and remuneration in theat profit. Now my clint want to dissolve the parthersip firm please clarify that how to proceed the wheather building is long term or short term asset please clarify the how to proceed

Regards

Kodanda Pani.G

9963110769

gkpani2003 @ rediffmail.com

Replies (1)

Aditya Maheshwari

CA in Practice

35867 Points Joined June 2009

When rent received is shown as business income then how depreciation is not charged on the said building. The same should have been charged and the same would have been taxed as STCG and the sale consideration will be the market value of the property as on the date of dissolution.

However in your case since u have not claimed depreciation and if the same is accepted by the A. O. then the transfer of property on dissolution will be taxed as LTCG is held for more than 3 years and STCG of less than 3 years and the tax will have to paid on sale consideration which will be the market value of the property less the indexed cost of acquistion.