Conversion of pvt ltd co. to llp -tax effect

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SAMIR SHAH (Querist)
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05 January 2014 a pvt ltd co having a paid up capital of Rs.1 lacs and reserves & surplus of Rs.5 lacs wants to convert itself into LLP. PLEASE DO GUIDE ON THE TAX EFFECT.

WHAT WILL HAPPEN TO RESERVES AND SURPLUS. WILL ON THE CONVERSION TO LLP THE PARTNERS WOULD BE ALLOWED TO WITHDRAW IT. IS THERE ANY TAX LIKE IN FOR CO. FOR BUYBACK OF SHARES.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 January 2014 There may be no tax incidence on the company in case the conversion takes place in accordance with clause (xiiib) of Section 47 of the Income Tax Act, 1961.
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Reserves and surplus can not be withdrawn within three years from conversion. The amount of R&S can be credited to the partners capital account in proportion to their shareholding in the company.
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