Challenge by AO for insufficient consideration

Hi Friends,


if i transfer an asset (current asset) from one company to another company for a value which is equal to book value but very much lower than existing market value, then can AO challenge it?

does answer remain same if both companies are part of same group / have same set of shareholder?

 

thanks in advance,

amit thakkar

Replies (1)
Originally posted by : amit


Hi Friends,


if i transfer an asset (current asset) from one company to another company for a value which is equal to book value but very much lower than existing market value, then can AO challenge it?

- documents relating to the transfer of asset can be challanged by AO if he found the consideration lower than the fair value. ( gift between the family members are not taken under this scope)

does answer remain same if both companies are part of same group / have same set of shareholder?

- does not matter as it is loss of revernue for state stamp duty and capital gain tax for direct taxes.

 

thanks in advance,

amit thakkar

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