Assets of Partnership Firm need not required Registration while Dissolution u/s.17 of Indian Registration Act..?!

The simple thumb rule is that every document that has to be treated as legally valid must be registered, either relinquishment or settlement deed etc.,

Hi Sir,

THANKS FOR THE REPLY.
HERE, IN THEIS CASE (RELINQUISHMENT OR SETTLEMENT), WHETHER THE LAND NEEDS TO BE REGISTRERED THOUGH PARTNERS WANTS TO KEEP THE LAND JOINTLY WITHOUT GO FOR SEPERATION/PARTITION?

IN OTHER WORDS SIMPLY, PARTNERS ONLY WIND UP THE BUSINESS BUT WANTS TO KEEP THE LAND JOINTLY. SINCE THERE IS NO TRANSFER/CONVEYANCE, I WOULD LIKE TO KNOW WHETHER IT NEEDS REGISTRATION OR NOT?(REFER SEC.17, INDIAN REGISTRATION ACT)

The Hon'ble Supreme Court had held that distribution of assets of a partnership on dissolution amongst its partners would not constitute transfer within the meaning of section 2(47) of the Income-tax Act.

The said dub-section provided for charging such transfers to tax as the income of the firm etc

When a partnership or a corporation winds up its operations, it has to liquidate and distribute its assets to the owners or shareholders. The partnership or corporation must assemble its assets, settle with creditors and debtors, and distribute its remaining assets among the owners or shareholders

 

When a partnership or a corporation winds up its operations, any plan to liquidate and distribute assets to the owners or shareholders must be in accordance with state laws.

In a voluntary dissolution, the shareholders usually adopt a plan of dissolution, which outlines the steps the directors will take to liquidate the corporation. The liquidation itself is handled by the directors. Liquidation of an insolvent corporation is usually carried out by a trustee in bankruptcy. If a corporation is dissolved as a result of court action, a court-appointed trustee must work out a liquidation plan under court supervision.

S. 45(3) and S. 45(4) were brought in to the statute book to deem pooling of assets by partners in to the firm and distribution of assets by the firm to partners on dissolution or otherwise, as transfers for tax purposes with a view to block certain escape routes for avoiding capital gains tax. Section 2(47) of the Act, which inclusively defines the term “transfer” in relation to capital assets, becomes a stranger  in this context. Typical tax controversies qua transfer of property between firm and partners are discussed hereunder.

Section 45. (3) The profits or gains arising from the transfer of a capital asset by a person to a firm or other association of persons or body of individuals (not being a company or a co-operative society) in which he is or becomes a partner or member, by way of capital contribution or otherwise, shall be chargeable to tax as his income of the previous year in which such transfer takes place and, for the purposes of section 48, the amount recorded in the books of account of the firm, association or body as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset.

Dear Mr.Kalaiselvan,
Thanks for your immd respond and detailed explanation.

Dear Mr. Siva,

You are welcome for your appreciations, you may revert with more queries for clarifications, if required.

 

Dear Sirs,
One of the Partner needs to relieve from his duties & responsibilities and retire from the partnership & would like to induct his immediate family member, say wife, in his place. However, he wish to continue the said partnership either in his name or his wife's, but the main subject is to Transfer his share of asset in the firm to his wife.

Simply, his family member (wife) Name needs to be inserted instead of his in the land which is now firm owned, implicitly, he & his cousin are the current joint owners/partners. As the said partner is the major investor/managing partner of the firm (which is Non-functional currently), he holds 60% of share & the rest is his partner's, as per Partnership deed.

So can he Transfer the land (Undivided Property) DIRECTLY TO HIS WIFE IN WAY OF SETTLEMENT as said in Transfer of Property Act (OR) He needs to brought her in as an INCOMING PARTNER OF THE FIRM (HE OUT..) AND TRANSFER ALL HIS RIGHTS/INTERESTS/SHARES OF PARTNERSHIP TO HIS WIFE?

Else, is it necessary/mandatory to make a Sale deed & Transfer the land to his wife, in case not inducting her in Partnership?

In simple words, Either he may wish to continue in Partnership Or inducting his wife as partner, he would like to transfer/settle his share to his wife, with other partner's consent. So, what is the simple way out?