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Pvt Ltd company buy residential plot and sell to director after some years

Others 678 views 1 replies

Can' a family owned Pvt Ltd company buy a residential property and claim depriciation on it?

Can it sell to any of the 3 directors after a period of say 5 years at depriciared value or at loss?

What are the tax implications both for company and director?

Replies (1)
Company can't provide trusteeship services unless otherwise include in object, Private company by vary nature deems to be very closely held company ( except in certain circumstances), If property is used for company's own objective or as registered/ corporate office then you can do it and also claim depreciation per IT act , Selling of property to director is Related partly transaction u/s 188 so board approval is required , if Property sold is less than FMV , then it shall be not at arm'.s length basis for which shareholders approval is also required , For IT act, taxability on disposal as per FMV and Valuation Certificate ( also required In EOGM) and capital gain shall be calculated on that basis , If difference between FMV and sale price to director > Rs.50,000 then it will added as taxable income in hand of buyer , so plan accordingly...
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