Conversion of private company to LLP qualifies as non-transfer only when prescribed continuity and ownership conditions are satisfied. Conversion of a private company or unlisted public company into a limited liability partnership is treated as a transaction not regarded as transfer for capital gains purposes, and the LLP takes the assets at the cost to the previous owner. The exemption applies only if all assets and liabilities vest in the LLP, all shareholders become partners in the same proportion, no other consideration is received, the former shareholders retain at least 50% profit-sharing for five years, the turnover and asset thresholds are satisfied, and accumulated profits are not distributed for three years.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Conversion of private company to LLP qualifies as non-transfer only when prescribed continuity and ownership conditions are satisfied.
Conversion of a private company or unlisted public company into a limited liability partnership is treated as a transaction not regarded as transfer for capital gains purposes, and the LLP takes the assets at the cost to the previous owner. The exemption applies only if all assets and liabilities vest in the LLP, all shareholders become partners in the same proportion, no other consideration is received, the former shareholders retain at least 50% profit-sharing for five years, the turnover and asset thresholds are satisfied, and accumulated profits are not distributed for three years.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
