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Supreme Court ends large tax evasion in land, property deals

The Supreme Court has put an end to a rampant tax dodge, going on for decades, where land parcels, properties, and redevelopment rights worth crores changed hands through partnership firms. Spurred by the apex court’s stand, the Income tax (I-T) department may now turn their glare on past property deals as well.


The trick used till now was holding real estate assets in a partnership structure, revaluing the properties to current market price, bringing in new partners who infused cash in the firm, and the old partners then withdrawing the funds that comes in after their capital accounts were credited - to the extent of their share in the profits of the firm --- as is as allowed in a partnership.

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