Where after revaluation of fixed asset, a firm was converted into private limited company and the company took away all the assets and liabilities of the firm and all the conditions of S.47(xiii) was complied with. After 2 years of conversion, the company sales an asset whose value after revaluation was Rs. 1000000/- (book value in the hand of firm was Rs. 100000/-) for a sum of Rs. 1100000/-. What will be the capital gain in the hands of the company particularly when there is nothing in S.49 which suggest that cost to previous owner will apply in such cases. There is a Tribunal decision on this issue, pl. reply with citation.
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Capital gain
Replies (1)
Short Term Capital Gains/Loss would be Sale value of Rs, 11lacs – Original Cost of Acquisition of the Asset by the firm.
This is as per Section 49(1)(iii)(a) of the I-T Act which says that cost of the asset would be cost to the previous owner by succession. In this case the firm is being succeeded by the pvt ltd. Co, so cost of the asset to the firm would be the cost of acquisition for computing of CG in the hands of the pvt ltd co.
I don’t think that any case law would be required for this, as the section itself explains the above. However if anyone can provide with the case law it would be helpful.
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