CA. Rohan Vaghasia (Practice) (35 Points)
14 December 2010Please help me in this fellas,
What is tax ability of partner in case where said partner sell his/her share in partnership firm? if yes, in which head it is taxable?
U S Sharma
(glidor@gmail.com)
(21056 Points)
Replied 26 December 2010
book value is neutralized . i.e. capital invested in partnership firm by partner.
premium if any, is to be added with taxable income of partner.
CA PARAS BAFNA
(Practising CA )
(33423 Points)
Replied 26 December 2010
If the retiring partner gets amount in excess of his capital and share in profit then nothing is chargeable to tax in the hands of partner.
CIT v R. Lingamallu Raghukumar(2001) 247 ITR
ANKIT GARG
(Job)
(44 Points)
Replied 20 August 2011
hello
we saled of our partnership (pattadare) of cinema hall .
we were partners since 1950 and we saled of in 2011 i just wanna ask about the taxes on the amount which we got
in selling our partnrship.
we all partners were giving rent of the land on which cinema is built since 1950 now cinema is closed .
ANKIT GARG
(Job)
(44 Points)
Replied 20 August 2011
| Originally posted by : ANKIT GARG | ||
 |
hello we saled of our partnership (pattadare) of cinema hall . we were partners since 1950 and we saled of in 2011 i just wanna ask about the taxes on the amount which we got in selling our partnrship. we all partners were giving rent of the land on which cinema is built since 1950 now cinema is closed . |
 |
CA PARAS BAFNA
(Practising CA )
(33423 Points)
Replied 21 August 2011
In this case the super structure of building has been constructed and the land owner is a third party.
The valuation of Super Structure i.e. Cinema Hall or/and property constructed around, as on 1.4.1981 is required. This is when the building has been shown as Capital Asset. No depreciation has been calculated upon the building. In case of Depreciable assets , capital gains will be calculated in accordance to Section 50.
Please reply the following questions-
1. we saled of our partnership (pattadare) of cinema hall .
A. Who is the owner of the cinema Hall. Whether any Individual or Partneship Firm ?
B. What do you mena by sale of Partnership of Cinema Hall ?
Whether, Super Structure has been sold or business as a whole has been sold.
C. The Cinema Hall is a depreciable asset. Whether Depreciation has been shown on Building ?
D. Also give more details of Furniture, Projector etc.
ANKIT GARG
(Job)
(44 Points)
Replied 21 August 2011
A. owner is one of the partner in cinema hall . like he own the land and share in buisness also.
owner of cinema hall are 3 including us , we owned evrything as a partner but not land but we pay rent of land.
we were 3 partners 1) we 25% 2) A 25% 3) B 50% this B also owned the land . so we give rent to B of land.
B. we saled our 25% of partnership in buisness of cinema hall , building , all the things included furniture and machines. we are like partner in cinema since 1950 so we owned pattedaare in it. without our concern no one can distruct and buld something else on it .
C. cinema hall is closed because it was going in loss ..1 year back i dont about depreciation shown or not but the balance sheet is in loss as shown to gov. we just saled it off
D. yaaaa furniture and machines projectors are there in cinema . like we saled evrything which we owned as our partnership. like we were having 25% partnership
ANKIT GARG
(Job)
(44 Points)
Replied 21 August 2011
please let me know how much we are taxable on the amount we got.
like what slab and of what rate ??
CA Saiyum khan
(Practicing CA)
(685 Points)
Replied 21 August 2011
It appears that partnership has been dissolved and all the assets of the firm is being sold out including building. Hence the consideration on sale of fixed assets being received by the firm would be shared by the partners in the ratio as stated in partnership deed and accordingly tax would be calculated.
ANKIT GARG
(Job)
(44 Points)
Replied 21 August 2011
helo
But we saled of our partnership as it is none of the things are sold yet i mean the cinema assets.
suppose we saled off our share in 50 lakhs and for your considerattion cinema assets are of 8 lakhs in total so our
share would be 2 lakhs.
now can you please give a ruff idea about the total tax i have to pay like just a idea that it would be some around how much ?
like 10 % 15 % or 20%
CA PARAS BAFNA
(Practising CA )
(33423 Points)
Replied 21 August 2011
Ankit,
We can opine only on the basis of facts presented before us.
Whether the firm is dissolved or being continued by the remaining partners?
Is it so that, you have been given a sum to get retired from the firm ?
Most Probably you can sell it either to A or B- the existing partners,
Because other than the Partner "B" or his associates, no body else will be interested in the super-structure.
It is important to know, whether and how the amount has been recorded by -the buyer of share- in his books. . The Cinema Hall is a depreciable asset. Whether Depreciation has been shown on Building ?
If there is no Building in the Balance Sheet, then it must be shown in the respective partners' Balance sheet.
It is also possible that the building may not be shown any where?
All these are such important issues, by providing the details of which, you would be able to plan better and can reduce your
tax liability. With all such details you may contact a CA or Consultant.
ANKIT GARG
(Job)
(44 Points)
Replied 21 August 2011
hey paras,
let me clear you one since we were partners since 1950 as a tenant of cinema hall and we were also giving rent of land so we selled it to third party because third party is interested to purchase whole cinema from all partners one by one so they he can setup some different buisness on cinema's land .
without purchasing our share or anybody share he wont be able to do that so we selled it for such a high price and i think we deserve this as we were like partner since last 60 years.
balance sheet in respect to buisness is shown in loss so that we get permession from gov to close it as we r in loss.
i think now i am very much clear to you. That's why that third party purchased our share from us then he'll go to partner A and B as well.
so now can you suggest me that how much we are taxable ?
ANKIT GARG
(Job)
(44 Points)
Replied 21 August 2011
and if we are taxable then how we save our taxes ??
and what rate of taxes applied on this type of capital gain ?
as we selled 60 years old partnership so some one said to me that you are 10 % taxable some one said 20 %
some one said you can save your whole tax .
so i am bit confused that to whom should i ask ? and who will be the right person that one help me out better...
CA PARAS BAFNA
(Practising CA )
(33423 Points)
Replied 21 August 2011
In this case all the partners will face the similar problem. The firm should not be dissolved.
You have not replied
It is important to know, whether and how the amount has been recorded by -the buyer of share- in his books.
The Cinema Hall is a depreciable asset. Whether Depreciation has been shown on Building ?
If there is no Building in the Balance Sheet, then it must be shown in the respective partners' Balance sheet.
Where it has been shown ? Clear first this issue.
ANKIT GARG
(Job)
(44 Points)
Replied 21 August 2011
paras ,
yes i apologies for above...
yaaa there is a balance sheet in which building value is Rs 2.2lac , machine + all other assets value is Rs 25000, our cash Rs 50,000 , and our indivisual cash 5000 Rs...
above figures are for cinema firm like we have 25% share so you can calculate my asset amount by that.
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