Suppose an Entity X buys shares of a private ltd company ( from existing share holder) at 70, the fair market value of the shares is 100.
There is tax implications on differnce 30 and entity X pays the tax say Rs 10.
1. What willl be the treatment of tax paid in books of account under AS regime ? Can it be capitalised as part of investment ?
2. When in future this is sold, what will be cost of acquistion for the purpose of calculating Capital gains under Income tax Act? 70 or 100 ?
3. Any other related matter you would like to draw attention to as an auditor ?
4. Will the answer differ if entity X is an LLP or partnership firm ?
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