Salman Ansari & Assoc.
247 Points
Joined June 2015
Transfer of assets from Proprietorship to Company is not regarded as transfer u/s 2(47), and therefore exempt. But your case is the opposite i.e. from Company to proprietorship, which isn't covered under the exemptions. Hence, Capital Gain will be attracted.
The WDV of the asset/block will be treated as the cost of acquisition and the actual consideration (unless it differs significantly from SDV/Fair Value) will be treated as Sale Consideration, and the difference will be taxable as Short Term Capital Gain.
If the same results in a loss, then the same will be adjusted against the profit of the company.
For the proprietorship business, the sale consideration will become the opening WDV and would be eligible for depreciation.