TMI BlogRationalisation of provision of transfer of capital asset to partner on dissolution or reconstitutionX X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset by way of distribution of capital assets on the dissolution of a firm or other association of persons or body of individuals (not being a company or a co-operative society)or otherwise, shall be chargeable to tax as the income of such firm or other association of persons or body of individuals of the previous year in which the said transfer takes place. Further, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration for the purposes of section 48. In this regard, it has been noticed that there is uncertainty regarding applicability of provisions of aforesaid sub-section to a situation where assets are revalued or self- generated assets are recorded in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to revaluation of any asset or due to self-generated goodwill or any other self-generated asset. New proposed section sub-section (4A) of section 45 of the Act applies in a case where a specified person receives during the previous year any money or other asset at the time of dissolution or reconstitution of the specified entity. The money or other asset is required to be in excess of the balance in the capital account of such specified person in the books of accounts of the specified entity at the time of its dissolution or reconstitution. In this situation, the profits or gains arising from the receipt of such money or other asset by the specified person shall be chargeable to income-tax as income of the specified entity under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or asset, as the case may be, which has been acquired without incurring any cost for purchase or which has been generated during the course of the business or profession. Consequential amendment is also proposed in section 48 of the Act to provide that in case of specified entity, the amount included in the total income of such specified entity under sub-section (4A) of section 45 which is attributable to the capital asset being transferred, shall be reduced from the full value of the consideration to compute income charged under the head capital gains . This is to be calculated in the manner to be prescribed later. This is to mitigate the double taxation which may have happened but for this provision in a situation where an asset which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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