Sale of property by a partnership firm

Others 8501 views 2 replies

Hi,

A registered partnership firm has sold a capital asset (property). I wanted to know the following:

1. Whether a registered firm is entitled to own property?

2. Can the same be sold?

3. In whose hands will the gains generated be taxable, in the hands of the firm or in individual partners.

4. In case the same is taxable in the hands of individual partners how will the gains be distributed. Whether the partners can claim indexation benefit for calculation of taxable capital gains

5. In case the same is taxed in the hands of the firm, can the firm avail of indexation benefir for calculation of capital gains.

6. Can a firm / partners claim exemptions u/s. 54 / 54 EC on the above taxable gains

7. Are there any other things to be considered in the above transactions.

Kindly reply to the above as the same is an urgent requirement.

Kindly accept a Thank You in advance for your responses

Replies (2)

1. yes

2..yes

3. in the hand of Firm only -Section 45(4) of Income tax act.-Fair market value on the date of transfer shall be taken as sales consideration .

5. If the capital asset is depreciable then no indexation otherwise indexation will be available if the asset is long term capital asset.

6.Exemption under section 54 is not available to firm. But exemption under section 54EC is available to all assessee-subject to other conditions

Are firm's liabilities allowed to be reduced from the sale value before capital gains are calculated?

This indexation will be done on the book value of the asset or fair value of the asset in 2001?


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