Property held by Partnership Firm
I had started a partnership firm in 1987. Along with my partner we purchased a 5000 sq feet plot to setup our factory. The plot was purchased in the name of the firm. The 7/12 extract mentions the name as "Firm's Name (XYZ Industries) represented by partners - Partner 1 & Partner 2".
The partnership deed is unregistered. Within 5 years of starting the firm ceased operations and for all practical reasons does not exist today at all.
There's no statutory registrations in the firms name at all. Not even PAN.
Now both the partners would like to distribute this 5000 sq feet of land. It is valued at INR 1 Cr now.
What are the tax implications after such distribution? Someone told us that if we dissolve and distribute this land, we will have to pay capital gain tax, since it it will be considered deemed conveyance from firm's name to individual partners names?
Is this the only way out to distribute? Is there a way wherein there are no tax implications since according to us practically there's no transaction involved?