Applicability of Tax on Acquiring Proprietorship Firm

Anup Shah (Director) (53 Points)

10 June 2010  

Gentlemen,

I am the promoter & founder director of a Pvt. Ltd. company, just incorporated few months back.  My company is into trading / agency business for foreign MNCs in India.  There is another proprietorship firm as well (owned by another person) into similar business line which is trading / agency of few other foreign MNCs in India.  In order to broaden the product offering from single company, I intend to acquire the interests of this prioprietorship concern. The proprietorship firm has been active for more than 5years now & have good business in terms of revenue & income.  Myself and the proprietor have in-principle agreed for me to acquire his interest in his firm.  But, it is important for us to know commercial implications of the proposed deal in terms of company law, taxation and basis on which the tax will be calculated.  Please help.  If you need any additional information, please feel free to let me know.

Regards,

ANUP SHAH