capital gain

Tax planning 489 views 1 replies

 

 

Dear All

my query is

1. Mr. A & Mr. B owns a plot of land (since 1994)
2. Mr. A & Mr. B along with Mr. C forms a pvt ltd co. ABC pvt Ltd.
3. ABC Pvt Ltd. constructs the structure on the above said plot of land (note : there is not tr of land in companies balance seet.)
4. All out goings for construction  are from the accounts of Company. (cc in 2009)
5. Company has raised funds from Mr. A ,as and by way of unsecured loan.
6. Stucture and plot both are in the name of Mr.A & Mr.B in the records of rights.
7.Mr. A Wants to sell the plot and structue?

 

1 What are the way out to him ?


2. What will be company's status in the whole state of affairs? (as all the funds are routed through the company) - can comany raise a bill for exp + supervision chargres to mr A & B ?  if yes

can company distribute its profit by way of directors remunaration ( i think there is no limit specified to private limited company)


3. To save or minimise  the capital gain (LTCG / STCG)what you all will suggest?

Can we treat Sale of land as LTCG and Sale of Structure  as STCG in the hands of Mr. A & Mr. B

4.Whether it is necessary to make the Company as a consenting party to the transaction ?
or
any other mode to complete the transaction as hastle free transaction.

 
Replies (1)

Dear Pradnya,

1) Mr. A can sell his part to Either Mr. B or to ABC pvt. Ltd. or to any third Party...

2) This is 1 question which u need to answer...What was the companies role in routing all the money through it since it was not having it's own fund as it had to take loan from Mr. A...I mean to say there was no consideration for the companies part...

Yes, Company can raise bills on Mr. A & Mr. B, but again that is something which A, B & ABC Pvt. Ltd has to decide...Law can't do anything in it..

Ya u r rite there is no limit on Director;s remuneration in case of Private Companies and Company can give remuneration to directors...

3) It is not optional my friend, u have to treat sale of land as Long Term & sale of Structure as Short Term..

4) No it is not necessary, beacuse Company did it's part voluntarirly & I don't think there was any contract in place amongst MrA, Mr. B & ABC Pvt. Ltd..So now Company cannot claim anything on legal grounds...


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