TREATMENT OF ESTATE PROPERTIES AFTER DEATH OF ASSESSEE, Income Tax

[CABIJENDERKUMAR BANSAL]

Dear All

Assessee was having business of sale purchase of land and building, he was expired in 2014.After that an Estate was formed by the surviving members of the deceased as an AOP. Estate was formed because settlement was not done between family members.

From that year onwards, estate is doing sale purchase of land and building and simultaneously transferring some stock to all the members in equal ratio at cost, for which we are doing journal entry as follows:

Capital A/c Dr.

To transfer (distribution of asset) credited in trading account to adjust stock

Now first query is : Is this treatment correct or any other treatment should be made ?

second query: Whether this transfer value will be considered for calculation of turnover for Tax audit purpose?

Third query: In the hands of transferee, it will be stock in trade or capital asset considering that they are not into business of sale purchase of immovable properties.?

Fourth query: can the estate continue its business activities(sale as well as purchase with third parties) or it should only distribute existing stock to its members ?

Thanks

Deepak kakkar

Posts / Replies

[DR.MARIAPPAN GOVINDARAJAN]

You may better to consult a Chartered Accountant in this regard.

[Ganeshan Kalyani]

The query needs much study and also the stake is high. Hence, as my collegue opined you may seek advise from a practising consultant. You may find experts from TMI itself. Thanks.

[KASTURI SETHI]

Rightly advised by both experts.