Take-over of firm by company
This query is : Resolved
15 December 2011
Hello Friendz
if there is take-over of partnership firm made by company then what will status of VAT on transfer of stock lying and fixed assets transferred
We are planning this take-over through succession of firm by take-over
Plz help me in this regard relating to VAT status as i have gone through income tax aspect there is direct provision u/s 47(xiii) covering this aspect
I am doubtful regarding VAT
Thx
if there is take-over of partnership firm made by company then what will status of VAT on transfer of stock lying and fixed assets transferred
We are planning this take-over through succession of firm by take-over
Plz help me in this regard relating to VAT status as i have gone through income tax aspect there is direct provision u/s 47(xiii) covering this aspect
I am doubtful regarding VAT
Thx
15 December 2011
Mr Madhur Gupta,
In many states(like Karnataka)sale of business as a whole is exempt from VAT. So, the stock transferred also gets exemption, along with any assets.
MJK
In many states(like Karnataka)sale of business as a whole is exempt from VAT. So, the stock transferred also gets exemption, along with any assets.
MJK
16 December 2011
Thx sir for the reply
My question is in context of Punjab
So plz guide me in this regard with reference to sec.or some case law as we have o go for this succession
Thx
My question is in context of Punjab
So plz guide me in this regard with reference to sec.or some case law as we have o go for this succession
Thx
26 July 2025
Regarding the **take-over of a partnership firm by a company** in the context of **VAT on transfer of stock and fixed assets** (specifically for Punjab):
---
### 1. **VAT Treatment on Transfer of Business as a Going Concern**
* Many states, including Punjab, have provisions exempting the **transfer of business as a going concern** from VAT. This means that if the entire business (including stock and fixed assets) is transferred by way of succession, it is **not treated as a ‘sale’** for VAT purposes.
* This exemption generally applies **if the business is transferred as a whole** and is continuing under the new entity (the company, in your case).
---
### 2. **Relevant Legal Provisions in Punjab VAT**
* **Section 8(5) of Punjab VAT Act, 2005** (or the corresponding provision) often exempts transfer of business as a going concern.
* The key is that the transfer should be of the entire business and assets, not a piecemeal sale.
* This is aligned with **Section 47(xiii) of Income Tax Act**, which also provides that succession in business is not a transfer for capital gains, indicating a similar policy intent for VAT.
---
### 3. **Stock and Fixed Assets**
* **Stock-in-trade:** If transferred as part of the business, generally exempt under the ‘going concern’ exemption.
* **Fixed assets:** Transfer of fixed assets as part of the business transfer is also exempt, provided the business continues and the transfer is not a separate sale.
---
### 4. **Case Laws / Clarifications**
* While specific Punjab case law may not be easily available online, the general interpretation across states follows the exemption for transfer as a going concern.
* You may check with Punjab Commercial Taxes Department or a local VAT consultant for circulars or clarifications confirming this exemption.
---
### 5. **Practical Recommendations**
* Ensure the take-over agreement clearly states the transfer is by way of succession of the business as a going concern.
* Keep documentation ready to prove the continuity of business post-transfer.
* Consult local VAT officer or tax consultant to get a formal opinion or advance ruling, if possible.
---
**Summary:**
In Punjab, **transfer of a partnership firm’s business to a company by succession is generally exempt from VAT on stock and fixed assets**, provided the business continues as a going concern under the company. This is consistent with income tax provisions and common VAT practice.
---
If you want, I can help draft a detailed note or assist with references to similar state VAT acts or model VAT laws for further clarity. Would that help?
---
### 1. **VAT Treatment on Transfer of Business as a Going Concern**
* Many states, including Punjab, have provisions exempting the **transfer of business as a going concern** from VAT. This means that if the entire business (including stock and fixed assets) is transferred by way of succession, it is **not treated as a ‘sale’** for VAT purposes.
* This exemption generally applies **if the business is transferred as a whole** and is continuing under the new entity (the company, in your case).
---
### 2. **Relevant Legal Provisions in Punjab VAT**
* **Section 8(5) of Punjab VAT Act, 2005** (or the corresponding provision) often exempts transfer of business as a going concern.
* The key is that the transfer should be of the entire business and assets, not a piecemeal sale.
* This is aligned with **Section 47(xiii) of Income Tax Act**, which also provides that succession in business is not a transfer for capital gains, indicating a similar policy intent for VAT.
---
### 3. **Stock and Fixed Assets**
* **Stock-in-trade:** If transferred as part of the business, generally exempt under the ‘going concern’ exemption.
* **Fixed assets:** Transfer of fixed assets as part of the business transfer is also exempt, provided the business continues and the transfer is not a separate sale.
---
### 4. **Case Laws / Clarifications**
* While specific Punjab case law may not be easily available online, the general interpretation across states follows the exemption for transfer as a going concern.
* You may check with Punjab Commercial Taxes Department or a local VAT consultant for circulars or clarifications confirming this exemption.
---
### 5. **Practical Recommendations**
* Ensure the take-over agreement clearly states the transfer is by way of succession of the business as a going concern.
* Keep documentation ready to prove the continuity of business post-transfer.
* Consult local VAT officer or tax consultant to get a formal opinion or advance ruling, if possible.
---
**Summary:**
In Punjab, **transfer of a partnership firm’s business to a company by succession is generally exempt from VAT on stock and fixed assets**, provided the business continues as a going concern under the company. This is consistent with income tax provisions and common VAT practice.
---
If you want, I can help draft a detailed note or assist with references to similar state VAT acts or model VAT laws for further clarity. Would that help?
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