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TRFR OF OFFICE PREMISES, IN PARTNER'S NAME

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Snarayanaswamy

PRACTISING COMPANY SECRETARY

38 Points Joined March 2007

KINDLY LET ME KNOW, WHETHER AN OFFICE PREMISES, A FLAT ( IN A POSH RESIDENTIAL AREA) WHICH WAS USED BY THE PARTNERS FOR THEIR OFFICIAL PURPOSE, AND ALSO CLAIMED DEPRECIATION BENEFITS ON THE PREMISES, CAN BE TRANSFERRED IN THE NAME OF A PARTNER, FOR HIS PERSONAL USE. IF THE FLAT IS SOLD TO SUCH A PARTNER, FOR A PRICE MORE THAN THE BOOK VALUE, AND THE RESULTANT PROFIT IS WHETHER TO BE TREATED AS A CAPITAL GAIN OR AS A BUSINESS PROFIT OF THE PARTNER SHIP FIRM. THE PREMISES IN THE QUESTION IS USED MORE THAN 36 MONTHS.

Replies (1)

Bala

CA Practice

63 Points Joined March 2007

If the block of assets ceases to exist and the if the sale price exceeds the Original cost of asset then the situation will be:
1. The profit in excess of original cost will be [b]short term capital g[/b]ains, as the asset is depreciated and the difference between the original cost and the WDV will be treated as balancing charge u/s 41.
If the block of assets ceases to exist and the if the sale price exceeds the WDV but not the original cost of asset then the situation will be:
1. The profit in excess of sale price over the WDV will be treated as [b]balancing charge u/s 41.[/b]