Sale of building by a private limited to individual

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A private limited company wishes to sell a building it owns. The discussion covers the necessary procedures, including passing a board resolution and signing a sale deed. It also addresses the tax implications, specifically capital gains tax, and explores how these gains can be distributed to shareholders or directors, clarifying that capital gains cannot be distributed as dividends.

Deepali

Deepali (Querist)

10 September 2022 My client held h building in the name of a pvt ltd now they want to sell this building.
So i want to know the what would be the procedure of transfer and what would be its tax implications and how to distribute capital gain arising from this transaction to share holders or directors its a closely held pvt ltd

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 September 2022 Pass board resolution authorising sale and authorise the directors to sign the sale deed.
Capital gains tax applicable.
Distribute the gains as divided.

Deepali

Deepali (Querist)

12 September 2022 Sir but as per my knowledge we cannot distribute capital receipts as dividend

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

12 September 2022 Dividend shall not be declared out of the Securities Premium Account or the Capital Redemption Reserve or Revaluation Reserve or Amalgamation Reserve or out of profits on reissue of forfeited shares or out of profits earned prior to incorporation of the company.

Capital gains not included in the above.

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