Vinay Channabasappa (CA in Practice) (55 Points)
19 November 2015Its 2 member registered partnership firm. Now the partners are retiring. Will there be any Capital Gain Taxation impact due to distribution of assets of the firm to the 2 retiring partners.
To be noted, this partnership firm did not undergo any kind of re-constitution since its inception. The same 2 partners who started this firm are retiring now.
Kindly advice.
Regards
Vinay
Karthik.V.Kulkarni
(Chartered Accountant)
(594 Points)
Replied 20 November 2015
Tony John
(Chartered Accountant)
(6085 Points)
Replied 20 November 2015
Absolutely. There will be capital gains in the hands of the firm in the year of transfer of capital assets to partners on its dissolution - Section 45(4).
Fair Market Value of asset transferred on date of transfer is taken as the value of Consideration. (If asset transferred is land, ignore stamp duty value).
CA VIRAL SANGHVI
(Finance head)
(681 Points)
Replied 20 November 2015
As per section 45(4) it is chargable to tax as there is transfer of capital asset in the hands of partner.
CA Aditya Shah
(Chartered Accountant Entrepreneur Ex E)
(1908 Points)
Replied 22 November 2015
Yes, Capital Gains Chargeable in the hands of the firm.
But see that the assets being distributed are Capital Assets.
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