banner_ad

Stock Transfer/Sale

Tax queries 1155 views 3 replies

A proprietor has taken cash credit from bank on the hypothecation of stock. Can he transfer / sale, this stock to a partnership concern in which he has 1/3rd share?

Replies (3)

 i think yes

he can

when he can sale stock to anyone

then there should not be any prob to transfer it to any firm

It is allowed. However it is a related party transaction and has to be done at  arms length pricing especially if both individual and partnership firm (even LLP or Company where individual is interested) are audited. Even if the saleis between the proprietorship concern and entity in which a proprietor's relative has substantial shares, the test of arms length price applies. Usually,profit gets transferred from a higher taxed firm to the individual. You should ensure that difference between market price of items transferred is not too much. VAT / CENVAT continue to remain applicable on the transaction.Even though this is not a foreign transaction there is a sort of a treshold limit if exceeded a reporting has to be done for audit on transaction between interested parties. That is as far as IT is concerned.

As far as banks are concerned they will have no objection if pricing is correct and money is actually transferred. They may have objection if it is done on a long term credit or to increase the capital or investment of the proprietor in the partnership firm.

agreed with Sunil ji


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 02 May 2026
Senior Executive

hitesh chandwani & co

Pune

B.Com

View Details
Company
Featured 29 April 2026
Manager- Finance and Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured ARTICLESHIP 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details