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Money paid to Retiring Partners on Retirement is not taxable in firm’s hands

by on Dec 21, 2013

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The Karnataka High Court in the case of Dynamic Enterprises (the taxpayer) held that the firm shall not be liable to capital gains tax under Section 45(4) of the Income-tax Act, 1961 (the Act) on ...

The Karnataka High Court in the case of Dynamic Enterprises (the taxpayer) held that the firm shall not be liable to capital gains tax under Section 45(4) of the Income-tax Act, 1961 (the Act) on account of payment of money to the retiring partner, not involving distribution of any asset. In order to attract capital gains tax under Section 45(4) of the Act, there should be an absolute cessation of right in property of the firm, as a result of which the retiring partners should hold an absolute title to property so relinquished by the firm. If this condition is absent, there could be no application of Section 45(4) of the Act.

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Money paid to Retiring Partners on Retirement is not taxable in firm’s hands Money paid to Retiring Partners on Retirement is not taxable in firm’s hands Document Transcript