Conversion of Company into LLP, Income Tax

[ROHIT GOEL]

Hi Sir,

One of our clients is looking to convert their Unlisted Public company into a LLP.

A summary of their financial position is as under:

Equity & Liabilities

Share Capital-Rs. 1 crore,

Securities premium-Rs. 1 cr,

Revaluation Reserve- ₹ 8cr.

Assets

Land (Original cost 2cr)- 10 cr

Now as per section 47(xiiib), to claim exemption from income tax on conversion into LLP, the value of assets of the company in any of the last 3 years should not exceed 5 crs. My question is since in our case, actual cost of land was only 2cr and it was only shown at 10cr due to revaluation, can we claim compliance with such condition?

At the alternate if we proceed with conversion without complying with such condition, what would be the sale consideration for such transfer of the capital asset being land since no actual consideration will be there.

Posts / Replies

[DR.MARIAPPAN GOVINDARAJAN]

Section 47(xiiib) deals with the conversion from partnership to a company. But your case is different.