18 February 2013
If a firm is succeeded by company on 1/04/2009 and conditions of Section 47 are satisfied and Company sold one of the machinery acquired during the succession on 1/05/2011 for Rs. 1000000 which is acquired at Rs. 500000( here the cost of acquisition of Previous owner i.e. firm will be taken, for simplification take it 1,00,000) leading to capital gain of Rs. 900000.
However the the shareholding of partners fall below 50% on 31/10/2012. Section 47A will attract and capital gain will be taxable in the hands of company for whole of the capital asset acquired during succession( including machinery Rs. 50000-100000).
My question will there be double taxation on machinery firstly Rs. 900000 and then Rs. 400000?
21 February 2013
Dear Pulkit, we cannot say it is doubly taxed even though it seems to be so. Firstly it is taxed in the hands of firm for transferring it to the company. Next the company has sold it and thereby getting attracted by income tax provisions.
CAclubindia
