CAPITAL GAIN

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This discussion explores whether converting an unlisted limited company into a Limited Liability Partnership (LLP) creates a capital gains tax liability on assets such as land and buildings. The consensus is that such a conversion is not considered a 'transfer' under tax law. Therefore, there is no income tax liability on the assets when moving from a company to an LLP structure.

neeloy dangra

neeloy dangra (Querist)
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07 August 2020 IF A UNLISTED LIMITED COMPANY CONVERTS HAVING TURNOVER OF RS 3.00 CR INTO LLP THEN WILL THERE BE CAPITAL GAIN LIABILITY ON ASSET HELD BY COMPANY( LAND AND BUILDING) . COMPANY IS CLAIMING DEPRECIATION ON BUILDING.PLEASE GUIDE. THANKS

c.bakshi

c.bakshi (Expert)
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08 August 2020 WHEN THE PROPERTY IS TRANSFER DUE TO CONVERSION FROM ONE ENTITY TO ANOTHER, ITS NOT COVERED UNDER THE MEANING OF SALE. THIS TRANSACTION EXCLUDES FROM THE DEFINITION OF "TRANSFER"

Harshit Bangar

Harshit Bangar (Expert)
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08 August 2020 there is no liability of income tax on such transfer due to conversion of company into LLP and it is also outside the definition of transfer.

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