Hi, Please help me on the below query.
XXX is a Partnership Firm, having 3 Partners. It is into Real Estate Business.
It owns a Plot. This Plot was bought in Oct 2012 at 10,00,000/- (Ten Lakhs). After Buying the Plot, not many transactions or expenses happened in the Firm's name.
Option I:
Now (in 2016-17) XXX wants to sell this Plot for 15,00,000/-. So on a profit of 5,00,000/- what is the tax liability (Capital Gains or Income Tax)? If it is Only Capital Gains, Can the Firm reinvest in other property (in 2016-17) from the profit of 5,00,000/- and not pay any Tax?
Option II:
Two Partners of XXX will release the Plot to 3rd Partner's individual name at no cost. If this is not feasible, the Firm gets dissolved and the Plot gets transferred to the 3rd Partner and then the 3rd Partner sells the Plot (in 2016-17) for 15,00,000/-.
Here the questions are : Should the 3rd Partner Pay the Capital Gains Tax on entire 15,00,000/-? Or on 5,00,000/-? or Can the 3rd Partner reinvest in other property (in 2016-17) the profit of 5,00,000/- and not pay any Tax?
If the 3rd Partner is liable for Capital Gains Tax on entire transaction amount, i.e, 15,00,000/- can he/she reinvest the entire 15,00,000/- in other property (in 2016-17 and not pay any Tax?
Which of the above options are best for minimising the Taxation?
CAclubindia
