• Factory shed given has a part of consideration

Factory shed has been given as part of consideration in august 2017 to my partners without any cash transfer and the shed was registered to them 
Will the partner who has given will liable to taxes under capital gains 
I am continuing with the same firm which transfer the property 
And also i have purchased the factory shed this august 2018
Asked 4 years ago in Taxation

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5 Answers

During the subsistence of a partnership, a partner does not possess an interest in specie in any particular asset of the partnership. During the subsistence of a partnership, a partner has a right to obtain a share in profits. On dissolution of a partnership or upon retirement, a partner is entitled to a valuation of his share in the net assets of the partnership which remain after meeting the debts and liabilities. An amount paid to a partner upon retirement, after taking accounts and upon deduction of liabilities, does not involve an element of transfer within the meaning of section 2(47) of the Act. Therefore, there is no transfer of capital asset by way of a distribution of the capital assets, on the dissolution of a firm or otherwise.

2) On retirement of assessee-partner from the firm there was no element of transfer of interest in partnership assets by the retired partner to the continuing partners and the excess amount received by him was not assessable to capital gains

Ajay Sethi
Advocate, Mumbai
87973 Answers
6207 Consultations

5.0 on 5.0

Since it is part of consideration not gift then for that part of consideration the capital gain tax will be levied.

Then you have to pay the short term capital gain tax on same,

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0


No the partner will not be liable for any capital gains, since no transfer of capital asset has taken place.


Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. Capital gain taxd is paid on the gain derived out of the investment of capital made.

2. In the instant case, there has been no investment made by the partners for making capital gain when the said properties have been transferred in their names as consideration. So, they won't have to pay any Capital Gain Tax.

3. However, they shall have to get the valus of the said properties transferred in their names as consideration and shall have to pay Income Tax at appropriate rate by showing the said value as income in their Income Tax Return of subsequent year.

Krishna Kishore Ganguly
Advocate, Kolkata
26614 Answers
726 Consultations

5.0 on 5.0

The company which transferred this property towards some consideration shall be liable to pay the LTCG tax.

If you are the owner of the company then you have to pay the long term capital gains tax on behalf of the company.

T Kalaiselvan
Advocate, Vellore
78131 Answers
1543 Consultations

5.0 on 5.0

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