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

HBJ Mumbai (Director) (125 Points)

13 February 2021

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?

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Chirag (Professional) (1979 Points)
Replied 17 February 2021

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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