Income Tax Implications on Conversion of firm into Pvt Ltd Company

Business In accordance with section 170 check out with section 189 of Earnings Tax Act, 1961, in case the organization of one individual (hereinafter referred as “company) is been successful by any another individual (hereinafter referred as Pvt. Ltd. business), then the evaluation u/s 143( 1 )/( 2 ), 144, 147, 153 A of Earnings Tax Act, 1961 shall be done SEPARATELY. The evaluation up to the date of conversion will be done in the hands of firm and assessment after the date of conversion shall be done in the hands of such private minimal company.

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Earnings Tax Ramifications on Conversion of company into Pvt Ltd Business

Income Tax Implications on Conversion of company into Pvt. Ltd.

Company

In addition of above kindly see the below mentioned other ramifications which might draw in the Income Tax provisions for succession of firm into Pvt. Ltd. Co.:–LRB-

1. Earnings under head Home Residential or commercial property:–LRB-

Any earnings or lease stemmed from home t/f to Pvt Ltd in a plan of conversion will be deemed to be the income from such home from the date when such conversion took place.

2. Earnings u/h Salaries

No pertinent requirements.

3. Earnings u/h Capital Gain & PGBP

  • u/s 47:- Conversion of Company into Pvt. Ltd. business will not be regarded as transfer accordingly, no Capital Gains will be emerges subject to some exceptions u/s 47 A.
  • Carry forward of losses & unabsorbed depreciation & AMT Credits:- Except the AMT Credit, all losses, unabsorbed depreciation and allowances shall be deemed to be the losses, unabsorbed devaluation and allowances of such Pvt Ltd business.
  • u/s 32:- Depreciation shall be supplied on proportionate basis to firm and business on the basis of days owned such assets.
  • Sec 44 AD/ 44 AE/ 44 ADA advantage is not readily available to Pvt Ltd Company.

    5. Income u/h Other Sources

    Any earnings emerging after date of conversion will be considered to be the earnings of company.

    6. Evaluation angle

    U/s 170 checked out with section 189: Two different evaluations shall be done i.e. separate evaluation of firm and business shall be done.

    7. TDS Provisions

    Any TDS deducted after date of conversion shall be claimed by such business and not by company, even if the TDS after conversion is subtracted of company.

    8. Various associated

    • PAN:– New PAN copy will be made of company
    • TAN:– New TAN copy shall be made from business

    9. Penalties & Recoveries

    • Any conflict of any provision of the act after the date of conversion shall be penalized and recuperated from such business.
    • Any conflict done by firm prior to the date of conversion and assessment of such company is done after the date of conversion, the assessment shall be made on firm & partners both, deeming that no conversion has actually been done by such firm.

    CS Piyush Jain
    Email ID:- cs.pj2016 @gmail. com

    Advised Articles

    • General queries and FAQs while making Rent Agreements
    • Difference in between Public & Private Business, Pvt Ltd and Public Ltd
    • Elimination of Statutory Auditor
    • List of All Exemptions to a Private Limited Business

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