TAX IMPLICATION U/S 46(2)

[Asked by Guest]

On conversion of unlisted public company into LLP, the LLP in consideration of assets of company gives Share in capital of LLP to shareholders of company.

Is this transaction covered u/s 46(2)...? as share in LLP is not the asset received by shareholder from copmany on its liquidation

Or can we directly apply sec 48

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[DR.MARIAPPAN GOVINDARAJAN]

In my view the transaction is covered under Section 46(2)

AI Summary

Tax treatment of company-to-LLP conversion: treated under section 46(2), not section 48, for shareholders' LLP capital shares.
Conversion of an unlisted public company into an LLP where shareholders receive LLP capital shares in consideration for company assets is treated as falling within Section 46(2), applying the distribution-on-liquidation mechanism rather than the alternative capital gains provision.