Search Results For: 43CA

Whether Distribution Of Assets By A Firm Would Be Liable To Tax?

QUERY: 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?
ANSWER: Click here to read the full answer of the expert
SECTION(S): , , ,

(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],

Posted in Income-tax

Which Value To Be Taken For Transfer Of Assets Other Than Capital Assets U/s. 43CA – Date of Agreement – Date Of Registration?

QUERY: S. 43CA : Date of Agreement - Transfer of assets other than capital assets

(a) Mr. A purchased flat in March 2008 (Consideration Value as agreed being Rs. 95 lakhs). On receipt of token amount by cheque, the Developer issued allotment letter to Mr. A in March 2008 i.e. before the provision of sec. 43CA were introduced. Allotment letter clearly specifies the consideration value which is same as the Agreement value, the milestones on the basis of which installments are due. The same is signed by the Developer as also countersigned by the customer. The consideration value then was greater than the Ready Reckoner Value (being 90 lakhs as on March, 2008).

(b) However the Agreement for the same was executed in April 2013 and registered in May, 2013 i.e. after the introduction of section 43CA, which is applicable from A.Y. 2014-15. The agreement value was less than the Ready Reckoner Value (Reckoner value being 125 lakhs as on April/May, 2013)

(c) All the payments throughout the transaction of sale of flat, have been received by cheque.

Can the allotment letter issued as on March 2008 be considered as the date of agreement fixing the value of consideration, for the purpose of Clause (3) of section 43CA?
ANSWER: Click here to read the full answer of the expert

Yes, sub-section (3) of section 43CA reads as under:

“Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken

Posted in Income-tax