Capital Assets tra. to LLP

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CA Chintan Parikh (Querist)
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01 February 2011 Designated partner wants to transfer his capital assets into LLP. What are the tax consequences regarding income tax act, at the time of transfer to LLP and sale by LLP at a future date?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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01 February 2011 At the time of transfer by designated partner into LLP:

U/s 45(3), the partner will be liable for Capital gains arising out of such transfer.
The value taken by the LLP will be sales consideration and the value as stated in the books of partner will be cost of acquisition which will be subjected to indexation depending upon the nature of the capital asset and its holding period.

At the time of transfer by LLP at future date:

Capital Gains (Loss)=
Sales Consideration-Book Value*

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* subjected to indexation depending upon the nature of the capital asset and its holding period.

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