Long term capital gains for property auctioned by drt

Tax planning 837 views 2 replies

Naveen

Partner

24 Points Joined December 2011

In 1992 Company X(Private Limited) stands guarantee for another person's bank loan. There is a Office Property for the company. The Company also runs into a lot of debt. The company has two director's out of which one expires in 1998 and another Director is inducted.

Since the loans are not repaid the banks approach the DRT and under securitisation act the property is attached. The Company's direct loans are still under litigation , whereas the loan for which the company stood guarantee has come for a final decree and in 2008 the DRT auctions the property to highest bidder.

The monies recovered are completly taken by the bank and there is some more liability towards the loan. The current position of the comapny is there are no assets and the company officially does not know for how much the property has been auctioned for.Now my queries are

A) Is the company liable for Capital Gains Tax. The Company did not receive a single Ruppee. Does not know how much it was auctioned for?

B) Ok if it comes to it the company has to pay Capital Gains Tax. (Substantial Amount of 50 lacs) , the company does not have any assets or monies. What is the role of the Directors and the liability? And can the director's be forced to pay from their personal assets. The Directors have obviously not benefitted in any way from this transaction.

Please reply at the earliest

Replies (2)

Subramanya

in practice

109 Points Joined November 2011

Dear

Mr.Naveen

A) As per my knowledge, there is no question of cap gain for the sale of assets of a company..it applies only to individuals..

if a co. sells(sale can be made in any way) its assets, that is recorded as sale of asset n profit or loss on such sale is directly credited or debited to P/l a/c n no question of cap gain arises thr....

Since the sale figure of the asset is not known u need to consider the value of guarantee given to the bank as the SP of asset and accordingly calculate the profit / loss fig...

All these can be done only if the Articles provided for the co. to stand as a surety to a thrd party..

Sir Pls correct me if my view is wrong..

@CS Siddharth Bumb.

B.Com CA Final CS

5270 Points Joined September 2009

Originally posted by : Subramanya
	Dear Mr.Naveen A) As per my knowledge, there is no question of cap gain for the sale of assets of a company..it applies only to individuals.. if a co. sells(sale can be made in any way) its assets, that is recorded as sale of asset n profit or loss on such sale is directly credited or debited to P/l a/c n no question of cap gain arises thr.... Since the sale figure of the asset is not known u need to consider the value of guarantee given to the bank as the SP of asset and accordingly calculate the profit / loss fig... All these can be done only if the Articles provided for the co. to stand as a surety to a thrd party.. Sir Pls correct me if my view is wrong..