Stock Transfer/Sale

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

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 29 October 2026
Accounts Executive

Synergy Keystone

Chennai

B.Com

View Details
Company
21 October 2026
CA INTER/ BCOM WITH EXPERIENCE

CA S KUMAR GUPTA & CO

Amritsar

CA Inter

View Details
Company
23 October 2026
Sr. Accountant

SANKARAN & KRISHNAN

New Delhi

B.Com

View Details
Company
13 November 2026
Accountant

New Mobile India

Muzaffarpur

B.Com

View Details
Company
16 October 2026
CA article trainee

Zerdi & Co. Chartered Accountants

Pune

CA Inter

View Details
Company
ARTICLESHIP 25 October 2026
Article Intern (CA Articleship)

Arpan Bohra & Co

Hyderabad

CA Inter

View Details
Company
10 November 2026
FP&A Executive

Gujarat Guardian

Ankleshwar

CA Final

View Details
Company
Featured ARTICLESHIP 28 October 2026
CA- Inter and Articles

N N V Satish & Co.,

Hyderabad

CA Inter

View Details