Question ID : 44354

Admission of a Partner-Applicability of Capital Gain Tax-GAAR-Sec 56(2)(x)

There is a Partnership Firm having three partners.The Net worth of the Firm is Rs. 100 Crores (considering Market value of Goodwill and Immovable Properties-whereas Net worth as per Books of Accounts is Rs. 50 Crores) as on 31-03-2022. A new Partner is admitted in the Firm on 1-4-2022 and he is given 25% Share of Profit in the Firm whereas existing partners Share is reduced. New Partner contributes Rs 25 Lacs in Firm as his Capital Contribution.Existing Partners are not given any Stock nor any Immovable Property nor any money over and above the balances appearing in their capital accounts. Query 1-Such Transaction involves any Capital Gain Tax Liability on continuing Partners. 2-The incoming Partner is Liable to tax u/s 56(2)(x) of I.tax Act 1961. 3-The abovesaid arrangement is covered under GAAR Provisions

posted by ARUN KUMAR ARORA on Aug 27 2022 12:00AM