Distribution of assets on dissolution of a company

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Have a lot to achieve (Querist)

11 December 2010 Sirs,
Our client is a pvt. ltd. and it has been closed in aug 2010 under easy exit scheme. At the time of closure the company had33,26,640 consisting142500 as capital and balance of3184140 is a part of Reserves & surplus.

Now I want to ask whether the company is liable to dividend distn tax, IF YES THEN ON WHAT AMOUNT AND ALSO STATE the shareholders LIABILITY for capital gain under the I.T Act.

Preeti Agarwal

Preeti Agarwal (Expert)

13 December 2010 When company distributes assets on liquidation it shall be liable to CG tax on the assets transferred and for this full value of consideration shall be the fair market value of asset on the date of distribution. Further no CDT required to be paid by co. upto the amount of reserves and surplus as shareholders shall be liable to tax for such distribution u/s 2(22)(e). For amount beyond reserves and surplus CDT is required to be deducted and same shall be exempt in the hands of shareholder

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