| Question And Answer | |
|---|---|
| Subject: | Introduction of land as capital contribution – Sec.45(3) – sec.43CA |
| Category: | Income-Tax |
| Querist: | Prakash Kulkarni |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Land as capital contribution, Partnership, stamp value |
| Date: | September 7, 2022 |
Assessee is LLP engaged in the business of real estate in Maharashtra . The LLP is owner of the land having book value of 10 Cr and said land is shown as stock in trade .
Assessee and other 3 parties have decided to form a partnership for development of project on the said land. Assessee will introduced the said land as capital contribution for it book value.
Issues :
1. Whether there are any stamp duty implication for introducing the said land at book value as capital contribution in the Firm
2. Whether provisions of SEc. 43CA and Sec. 56(2) will be applicable as the stamp duty value of the said land is 20 Cr.
3. whether any tax implication in the hands of assessee LLP for introducing the land at at book value as per provisions of SEc.45(3) of the Act.
pl. guide
Stamp duty will have to be paid as per the circle rate (ready reckoner value). Further, deeming provisions such as section 43CA, 50C and 56(2)(x) of the Income-tax Act, 1961 (Act) will not apply where section 45(3) of the Act is applicable.
In the case of ACIT v. Amartara (P.) Ltd. [2021] 128 taxmann.com 125 (Mum – Trib.) held that since case of assessee fell under scope of section 45(3) of the Act which itself is a deeming section and provided for deeming consideration to be adopted for computation of capital gains under section 48, section 50C of the Act could not be extended to compute deemed full value of consideration accruing as a result of such transfer for computation of capital gain.
In the case of Network Construction Company v. ACIT [2020] 185 ITD 318/119 taxmann.com 186 (Mum. – Trib.) it was held that provisions of section 50C of the Income-tax Act, 1961 will not operate where section 45(3) of the Act is operating.