Query in LLP Taxation

[S SHANMUGASUNDARAM]

Query in LLP Taxation

Facts

1. A profitable Private Ltd Company with only 2 shareholders and 2 Directors
2. Its Reserves is Rs.300 Lakhs
3. It is owning a Immovable property more than 3 years old
4. Book Value of said immovable property is Rs.20Lakhs and Market Value is Rs.100 Lakhs
5. Its annual Turn over is 200 lakhs and profit after tax is Rs.35Lakhs
6. It wants to convert into LLP under the provisions of LLP Act.
7. No secured Loan

QUERY

1. Tax liability for Private Ltd for the conversion
2. Tax liability for Individual shareholders for the conversion
3. tax Liability when the above said Rs.300 lakhs reserves credited to Partners a/c upon conversion
4. tax Liability when the above said Rs.300 lakhs reserves drawn by Partners any time  after  conversion
5. Tax on the PAT of Rs.35Lakhs credited to partners a/c every year after conversion

AI Summary

Company Conversion to LLP: No Capital Gains Tax if Section 47(xiiib) Conditions Are Met A private limited company with two shareholders and directors, reserves of Rs.300 lakhs, and an immovable property valued at Rs.20 lakhs (book value) and Rs.100 lakhs (market value), seeks to convert into a Limited Liability Partnership (LLP). The company has an annual turnover of Rs.200 lakhs and a profit after tax of Rs.35 lakhs. The query involves tax liabilities related to the conversion, including implications for the company, individual shareholders, and the treatment of reserves and profits post-conversion. The response outlines that no capital gains tax applies if specific conditions under section 47(xiiib) of the Income Tax Act are met.