Capital gains tax

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abc (Querist)
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13 January 2013 Dear experts, Please guide me as soon as possible.

A pvt co. is involved in Trading business. It deals in real estate and properties.

It has acquired a factory for 1 Crore in 2010-11 and wants to sell it for around 20 Crore.

My Questions -

1) I want to know what capital gains tax it will attract? and also if there are any ways to save this capital gains TAX...??

also

2) during the said period it has under gone change in shareholders. One old holder has left and 12 new holders have entered. WIll this transaction also attract capital gains tax on transfer of shares to this PVT LTD CO?

Please note - its a PVT LTD CO

Thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 January 2013 Whether the Factory has been purchased as an item of trade or like a trading goods by the Pvt Ltd Co. ? or -the same has been shown as an Investment ?
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Whether the factory has been run by the Pvt Ltd Co or kept as it was ?
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Please furnish more details.
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2. Transfer of shares by the outgoing member to new incoming members, does not create any tax liability on the Company.
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abc

abc (Querist)
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13 January 2013 Sir
factory held as capital work in progress

and is kept unused as it was

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 January 2013 And...... is being sold as it was...
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It will give rise to Short Term Capital Gains, and in that case hardly any tax saving measures can be suggested
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Looking to the tax liability, it is better to accomplish the capital work in progress by incurring certain expenditure to any how run the factory partially or fully.
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Once the company starts claiming depreciation on factory assets better tax planning area may emerge out.
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abc

abc (Querist)
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13 January 2013 so sir do you suggest to run the factory?

because as of now the management is not interested in running it.

can there be any measure to save tax by transferring the factory to the buyer after the completion of 36 mths? i.e allowing it to become long term?

is there any way to enter into a forward contract with the interested buyer to transfer him the factory possession after this 36mth period? by just receiving a token now so that he can be confirmed as a willing buyer?

i really appreciate ur views and help....in the above comments....

thanks a lot sir.... may god bless u with good health prosperity and happiness for your kindness generosity and gratitude :)

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 January 2013 To avoid any kind of loss, a memorandum of understanding can be developed between the two parties and the factory can be brought in a running condition. At a suitable point of time the ownership of the factory may be transferred. The terms and conditions may be decided looking to the intricacies in the matter.
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Thanks for the best wishes.
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abc

abc (Querist)
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13 January 2013 and finally....this way company can save tax by being covered under LTCG and get indexation also right?

thankss... :)

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 January 2013 This can't be said as "finally" as the matter involves STCG also. A comprehensive planning and further investment is required for saving taxes.
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abc

abc (Querist)
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13 January 2013 Thank u for ur time sir... I will study it further and revert to u if there is anything more... :) Thanks once again!! Take Care

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