Transfer of Business under TNVAT Act'2006

[venkatachalapathy parameshwaran]

Dear Expert,

One of the Partnership firm is converted to Private Limited Company. So the Partnership firm's Closing Input Tax Credit is Converted to Opening Credit in Private Limited Company.Now the Assessing authority is not accepted and rejected. So the client has go to Writ Appeal. But they received remanded and issued the fresh order by the assessing authority directed by High Court.

As per the Section 19(14) of TNVAT Act 2006: Where the business of a registered dealer is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the registered dealer shall be entitled to transfer the input tax credit lying unutilized in his accounts to such sold, merged, amalgamated, leased or transferred concern. The transfer of input tax credit shall be allowed only if the stock of inputs, as such, or in process, or the capital goods is also transferred to the new ownership on which credit has been availed of are duly accounted for, subject to the satisfaction of the assessing authority.

Now my situation is : The Assessing Officer need to proof of Input Tax Credit transfer from Firm to Private Limited Company. So please guide for this Situation (if any favoured High Court Order please kindly mention with reply)

To the above said Section is not clearly mentioned any proof for Transfer of Input Tax Credit.

[YAGAY andSUN]

In our view the business was transferred as a going concern and it is a transfer of a business as a whole and clearly falls with an Explanation III to section 2(41) of TNVAT Act .

AI Summary

Input tax credit transfer on business transfer: entitlement if stock and capital goods transfer is accounted and proven to authority. Entitlement to transfer unutilized input tax credit exists when a registered dealer's business is transferred and the transferee receives the stock of inputs, inputs-in-process or capital goods on which credit was availed, subject to the satisfaction of the assessing authority. A partnership-to-company conversion may be treated as a transfer as a whole (a going concern), so proof should show transfer and accounting of the specified assets and corresponding credits in the transferee's opening accounts.