Transfer of company

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N. Patidar (Querist)
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29 November 2012 ABC Ltd. is holding only one immovable property costing Rs. 25.00 Lacs since 2001. The Capital structure of the Company is Share Capital 1.00 Lacs and Unsecured deposits from directors and relatives of directors Rs. 24.00 Lacs. Now the comapny transferred 1.00 Shares to Mr X, Y, & Z at Rs. 1.00 and withdrawn Rs. 24.00 Lacs from Comapny and new promoter introduce Rs. 24.00 lacs. What will be the tax complications of Capital Gain. Plese quote relevant case laws

V K Bajaj

V K Bajaj (Expert)
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29 November 2012 Mr Patidar you should have given the Face Value of Shares.

Anyhow, as the shares has been transferred @ Rs. one per share so there is no chance of any gain out of this transaction. As no profit hence no capital gain. No capital gain means no tax liability.

As the new shareholders have invested Rs. 24 Lakh which was withdrawn by old Directors in order to square up their Deposits. No tax liability on such withdrawals. However, the interest component is taxable.

Briefly your question does not carry any Capital Gain hence no tax complication.

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