Section 50C(1) if the Act provides that in case where the value adopted or assessed by the stamp valuation authority in respect of a transfer of land or building or both for the purpose of payment of stamp duty exceeds the consideration received or accrued by the assessee for such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing for such transfer.
||M/s. GE is a registered partnership firm in the business of property development. It holds certain residential flats / office premises, which are not yet sold and which are held as stock-in-trade. Out of such properties, it intends to distribute certain premises among the partners at book value, by journal entries. It wants to know –
(i) What are the implications under the Income- tax Act, 1961 and under Stamp Duty / Registration Act?
(ii) Will it make any difference if the distribution takes place upon dissolution? How accounts are to be settled?
(iii) What will be the character of the property received in the hands of the partners?
As regards the balance stock remaining with the firm, it desires to know what are the implications under Income-tax Act, 1961 and Wealth Tax Act, 1957?
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||CA. H. N. Motiwalla
||43CA, 45(2), 45(4), 56(2)(vii)
||capital gains, Distribution of stock, partnership firm, stamp duty
(i) Section 45(4) of the Income-tax Act, 1961 would not be applicable, as M/s. GE is holding properties as stock-in-trade.
Now, as per the query M/s. GE want to distribute the stock-in-trade to its partners. In other words, the partners would withdraw the stock from business. In Sir Kikabhai Premchand v. CIT [24 ITR 506],