Facts: A firm with 2 partners own a plot of non-agricultural land in a village, 13 kilometers away from its local Municipal Corporation and the population of this village is around 2000 people. The land stands in the name of firm. What would be the tax implications in the following cases:-
- A new partner is admitted and subsequently one erstwhile partner retires. The retiring partner is paid a lump sum amount, which includes his share in the value of capital appreciation of the plot of land.
Query: Whether this lump sum amount paid to the retiring partner is taxable? If so, then under which section?
- The plot of land is sold outright by the firm.
Query: Whether the capital gains from sale of this N.A plot is taxable?
- The plot of land is divided amongst the partners in their profit sharing ratio.
Query: Whether the firm would be liable to capital gains tax even though if the land has not been sold.
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