TaxTMI 
TaxTMI 
Conversion of Proprietorship firm into Pvt. company
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....onversion of Proprietorship firm into Pvt. company<br> Query (Issue) Started By: - PANKAJ GROVER Dated:- 24-2-2012 Last Reply Date:- 29-2-2012 VAT + CST<br>Got 3 Replies<br>VAT / Sales Tax<br>In case, a Proprietorship firm registered under VAT at Delhi and Noida, gets itself converted into a Private Limited Company then what are the consequences of the same ? Also, is it attracts any liability on....
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.... fixed assets and taxable goods ? Reply By Pradeep Khatri: The Reply: In this scenario, the principle of "On Going Concern" will be applicable. Hence, there would not any tax be applicable. Reply By Vivek Harsh: The Reply: Transactio not regarded as transfer Sec 47(xiv) where a sole proprietary concern is succeeded by a company in the business carried on by it as a result of which the sole prop....
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....rietary concern sells or otherwise transfers any capital asset or intangible asset to the company : Provided that-- (a) all the assets and liabilities of the sole proprietary concern relating to the business immediately before the succession become the assets and liabilities of the company; (b) the shareholding of the sole proprietor in the company is not less than fifty per cent of the total....
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.... voting power in the company and his shareholding continues to remain as such for a period of five years from the date of the succession; and (c) the sole proprietor does not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company; If above procedure is followed no liability under Income tax act Reply By DEV K....
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....UMAR KOTHARI: The Reply: There is transfer of business undertaking by which say P proprietor ceases to be proprietor and P P. ltd succeeds the business on incorporation of company and becomes proprietor of busines undertaking. There will be no sale of goods in ordinarly course of business of dealer P, ratter P Pltd will sell goods as dealer. Therefore, there should not be liability of VAT. Howev....
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....er, exact applicable provisions need to be examined. The modus operandi of succession of business of proprietary concern by company also need to be examined.<br> Discussion Forum - Knowledge Sharing ....