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Conversion of a proprietor bussiness us 47 (xiv) of IT act

vikash (student) (44 Points)

20 May 2021

I have 2 queries related to Sec 47 (xiv) of IT act,

1) Whether the sole proprietorship has to convert into new pvt ltd company or the business of proprietor can be succeeded by existing pvt ltd company,

2) If existing company can takeover the business of proprietor then in that case whether all the credentials of proprietor are also transferred to existing company i.e its past working experience, certificates from different dept., all registrations with different dept, etc

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7 Replies

i am Kashif (372 Points)
Replied 20 May 2021

Sole proprietorship can't transferred the business or transfer ownership

veerendar singh (tax consultant) (3301 Points)
Replied 21 May 2021

I think it must be converted into company.

on other registrations- the company will have to apply for new registration and license. the old one will cease to be valid.

i am Kashif (372 Points)
Replied 21 May 2021

Yes however it can Convert into Pvt ltd

anil jain (Partner) (1067 Points)
Replied 22 May 2021

for taking the benefit of section 47(xiv), the conditions/provisions are as below

where a sole proprietary concern is succeeded by a company in the business carried on by it as a result of which the sole proprietary concern sells or otherwise transfers any capital asset or intangible asset to the company :

Provided that—

(a) all the assets and liabilities of the sole proprietary concern relating to the business immediately before the succession become the assets and liabilities of the company;

(b) the shareholding of the sole proprietor in the company is not less than fifty per cent of the total voting power in the company and his shareholding continues to remain as such for a period of five years from the date of the succession; and

(c) the sole proprietor does not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company;