Dear Sir,
Mr. A is a registered owner of land. He is also a shareholder in company B. Company B wants to build a mall on that land.
My query is:
1) If Mr. A sells land to Company B, then it will be taxed as LTCG. Neither company nor Mr. A wants to pay tax.
2) If Mr. A gives that land on lease to company B & than company B builds mall on that land. Whether any provisions of Income Tax or Companies Act are violated. If not what are the other points to be kept in mind.
If u have any other way than please suggest.
Please reply ASAP.
Thanks
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Transfer of capital asset by shareholder to company
Replies (1)
HII SHEZAD
AS PER OF YOUR 1ST QUERY
(A) IF LAND IS WITH MR.A FOR 3 OR MORE THAN 3YEARS THEN LTCG WILL BE PPLIED AND TAS ACCORDING TO THAT WILL HAVE TO BE PAID BY MR.A @ 20%+ED.CESS+SHEC+
(B) IF LESS THAN 3YEARS THEN STCG @ 15%+ED.CESS+SHEC
AS PER YOUR SECOND QUERY THERE IS NO VIOLATION AS PER INCOME TAX ACT BUT THERE CAN BE VIOLATION IF MR.A HAS A SUBSTANTIAL INTEREST (20% OF SHARE CAPITAL) IN THE COMPANY,THEN MR. A WILL BE RELATED PARTY TO THAT COMPANY SO LEASE WITH COMPANY WILL BE VIOLATED
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