Conversion of partnership firms to company

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CA PARTH PATEL (Querist)
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29 April 2013 Hi,
I want to convert 2(TWO) Partnership Firms into one Private Limited Company. Please suggest me the effective way out through which i can save the tax on transfer and covert both the firms in one company.

VISHRUT

VISHRUT (Expert)
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29 April 2013 The best way is to close partnership firm through retirement of partner by transferring all assets and liabilities in their account.

Once partnership firm is closed than partner in their personal capacity should subscribed share capital of newly formed company and transfer all this liabilities and assets as a part of Pre-operative contract which shall be approved by the company in first general meeting and all business will be transferred to business without paying any additional tax liability except for the profit distribution from the partnership firm.

CA PARTH PATEL

CA PARTH PATEL (Querist)
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30 April 2013 Thanks Vishrut..But in that case also how would i be able to take care of the provisions of section 47 of the income tax act???

VISHRUT

VISHRUT (Expert)
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30 April 2013 Dear Parth,

Section 47 only applies when the firm is than over or amalgamated with the company while the option i have suggested will not be in the nature of amalgamation rather same shall be transfer of asset to partner and than introduction of capital assets by shareholder to company.

It will not have any impact on the Applicability of Section 47.

CA PARTH PATEL

CA PARTH PATEL (Querist)
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30 April 2013 Thank you very much vishrut...

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