Source- ICAI MCQ Booklet MCQ 1.5
Ad per 45(3), in case of transfer of Capital asset by partner to firm, FVOC=BV recorded in by Firm.
Sec 55 stipulates that Cost of Acquisition of Immovable property acquired on or b4 01.04.2001 shall be lower of FMV on 01.04.2001 or SDV on 01.04.2001.
In above MCQ FVOC as per 45(3) should be 18 lakhs & at the time of sale of land by Firm such value shall be deemed to be cost of acquisition. Accordingly, CG- 30 lakhs ( it being more than 110% of consideration) less 18 lakhs= 12 lakhs.
Buf as per ICAI ans is 8 lakhs ie 28 lakhs less 20 lakhs. But 28 lakhs can be taken only if land is acquired on or b4 01.04.2001 & question is silent in this regard.
& FVOC as per ICAI – 20 lakhs also seems incorrect ie not as per 45(3).
pls guide.
On the date of Transfer to Firm the value at which land was transferred was lower than SDV so fair value pe record karna para hoga and tax Dena para hoga and then comes the transfers toh usme 28 lakhs hi hoga and considering this the CG would be calculated
But this treatment is not in accordance with sec 45(3) & sec 55.
Are there any other provisions which have been applied?
Sec 55 ka koi role nahi hai isme and 45(3) toh thik hi laga rights chor dia toh Transfer kardia towards firm toh tax toh Fair value of the Asset hoga
The correct provision applicable here is sec 50c:
When an immovable property is sold then its sale price should be SDV on that date if the property is sold at a price lower than SDV and the difference is more than 10%. So when land is sold to firm for 18lac, this value +10% i.e. 18+1.8 is less than 20lac, the SP will be taken as 20l and accordingly its COA in the hands for firm will be 20l. Difference 2l will be taxed as OS us 56(2)x in hands of firm.
Similarly when firm sells it for 25l, this value+10% being less than SDV ie 28l, the SP will be taken as 28l and thus CG is 8l. Fair value has no relevance here. The difference 3l will be taxed as OS us 56(2)x in hands of buyer.
Got it. Thanks a lot!!