Proprietorship To Company

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

07 July 2010 One of the Indvidual running the business in form of Proprietorship now it forms Company??
Now the question is what will be the Tax consideration in case if it transfer all his assets & Liabilities to his Pvt Ltd Company

Whether it can transfer all his assets & liabilities merely by book entry??

Akhil Agrawal

Akhil Agrawal (Expert)
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07 July 2010 Nothing. refer Section 47(xiv). Some Terms & Conditions are there

Querist : Anonymous

Querist : Anonymous (Querist)

08 July 2010 One of the condition is to allot share against consideration that is not possible Because shares already issued upto Authorised Capital limit..
Any other way ????
Is it mandatory to shoe=w consideration..

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Akhil Agrawal

Akhil Agrawal (Expert)
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08 July 2010 Yes it becomes mandatory to issue Share Capital. & his Shareholding should be 50% in that co. for 5 yrs. Increase the Authorised Capital & issue shares.

If u do not issue then Capital Gains will be attracted. Also refer Section 47A.

Note one thing the Business of the Firm & Co. Should be the same

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2010 What in case Transfer without consideration???
In that no question of Share allotment will arise

Akhil Agrawal

Akhil Agrawal (Expert)
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09 July 2010 How can there be without consideration. Just find out the value of the Business of Proprietory Business at M.V. Now suppose it comes to Rs. 5,00,000 & the share capital issued for that co. is b4 this transaction is 50,00,000 then the proprietor should be holding 2500000 of shares.Means 500000 out of the Business purchase & 2000000 will be extra issued to him. & for these 2000000 shares he has to bring in cash.