CAPITAL GAINS

[MOHINDER KANSAL]

ONE OF MY CLIENT IS PARTNERSHIP FIRM WHICH IS NOW DISSOLVED AND ASSETS ARE DISTRIBUTED AMONG PARTNERS AT PRESENT MARKET VALUE WHICH RESULTED IN GENERATING LONG TERM CAPITAL GAINS TAXABLE IN THE HANDS OF THE FIRM. NOW MY QUERY IS WHETHER FIRM CAN PURCHASE THE NHAI BOND AND GET EXEMPTION U/S 54EC. IF YES, IN WHICH NAME AND HOW ? AT MATURITY HOW THESE SHALL BE ENCASHED WHILE THE FIRM IS ALREADY DISSOLVED. PL. GUIDE ALONGWITH CASES, IF ANY.

AI Summary

Dissolved Partnership Firm's Eligibility for Section 54EC Tax Exemption on Asset Distribution Raises Debate on NHAI Bond Investments. A query was raised regarding a dissolved partnership firm that distributed assets at market value, resulting in long-term capital gains. The question concerned whether the firm could invest in NHAI bonds for tax exemption under Section 54EC and how to manage these investments post-dissolution. One response suggested that the dissolved firm cannot claim the exemption, while another argued that the firm can still act for compliance purposes, including investing in bonds within the statutory timeframe. The investment can be made in the partners' names, allowing them to realize the funds upon maturity. The dissolution deed should address these matters.