Hi, This query is regarding sale of Tenancy Rights by a firm.
The facts of the case are as under:
A registered partnership firm had purchased an immovable property around 1965 (It is not yet known whether the proceeds were paid by the firm or the partners). Post the same the partnership has undergone various changes with regards their constitution of partners). The current partners sold the property / tenancy rights in August 2011.
We would like to know the following:
1. Whether sale of tenancy rights amounts to transfer and is subject to capital gains as per the income tax act.
2. Does sale also include surrender of the tenancy rights to the original owners or are the same different and viewed differently as per the income tax act.
3. Can the partnership firm avail benefir of indexation on the above transaction.
4. WHat will be the cost of the tenancy rights - the amount paid when the same was purchased in 1965 or cost as in 1981 (as computed per the provisions of the INcome tax act)
5. In case the sale of tenancy rights is treated as capital gains can the firm claim benefit under the provisions of sections 54 / 54 F / 54EC
6. At what rate will the capital gains be taxed
7. In case the above is not treated as Capital Gains under what head of income will the same be inluded for taxation purposes and at what rate
8. WHat expenses can be claimed by the firm whil computation of gain / income in the above transaction.
It would be great help if you can also provide citings of cases for the above wherever possible.
Also feel free to point out any other point that you feel I may have missed out.
Thanking you all in advance.
CAclubindia
