Presently I am converting a PVT Co. in to llp.
the company has assets worth 5cr & authorized capital is 4,00,000/-
as per new section 47(xiib)
the company fulfills all the 6 conditions.
so according to this the capital gain on conversion from company to LLP should be taxfree.
but one of my learned friend told below things:
Under the provisions of LLP Act, 2008 on conversion of company into LLP, all tangible (movable or immovable) property vested in the company, shall be transferred to limited liability partnership
Section 45 of the Income Tax Act provides that any profit or gains arising on transfer of capital asset shall be chargeable to capital gain.
no exemption is granted to conversion of company into LLP. Therefore till any such amendment in Income Tax Act, the transfer of all assets (movable assets) and liabilities of the Company will be made at their Book Value at the time of conversion to avoid any Capital Gain Tax. In respect of immovable property, as per section 50C of the Income Tax Act, in case of transfer of land , building or both, the value of asset calculated for the purpose of making the payment of stamp duty ,shall be taken to be value of asset and therefore any difference in the book value and valuation as per stamp duty, shall be liable for capital gain
Please guide me further in this matter as to avoid capital gain.
CAclubindia
