{"id":18229,"date":"2021-05-15T16:45:50","date_gmt":"2021-05-15T11:15:50","guid":{"rendered":"https:\/\/itatonline.org\/digest\/?post_type=qa&#038;p=18229"},"modified":"2021-05-21T10:07:36","modified_gmt":"2021-05-21T04:37:36","slug":"conversion-of-llp-into-company","status":"publish","type":"qa","link":"https:\/\/itatonline.org\/digest\/qa\/conversion-of-llp-into-company\/","title":{"rendered":"When a firm is converted in to Limited Liability partnership (LLP) whether exemption is provided u\/s 56(2)(x) of the Act .?"},"content":{"rendered":"<p>An LLP is proposed to be converted into a Pvt. Ltd. company. The said conversion is exempt u\/s 47(xiii) in the hands of the firm. However no separate exemption is provided u\/s 56(2)(x).<\/p>\n<p>Therefore, despite the economic interest of the shareholder (being the erstwhile partner) remains same in the Pvt. Ltd. Co. vis-a-vis LLP, would the shareholder be taxed u\/s 56(2)(x). The Fair Value of equity shares received by the shareholder (as derived u\/r 11UA less balance in the partner&#8217;s capital account could be bought to tax u\/s 56(2)(x).<\/p>\n<p>Further, the new Company is merged with another company whereby the amalgamated entity will have shareholders holding more than 50% stake in the amalgamated company who were partners in the erstwhile LLP holding 100% stake of the LLP. Therefore will this merger come within the mischief of 47A and exemption u\/s 47(xiii) stands denied.<\/p>\n<p>regards<\/p>\n","protected":false},"comment_status":"open","ping_status":"closed","template":"","qa_expert":[37],"qa_category":[23],"qa_tag":[164,82,165],"class_list":["post-18229","qa","type-qa","status-publish","hentry","qa_expert-advocate-aditya-ajgonkar","qa_category-income-tax","qa_tag-conversion-of-firm-in-to-llp","qa_tag-conversion-of-llp","qa_tag-exemption"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa\/18229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/qa"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=18229"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=18229"}],"wp:term":[{"taxonomy":"qa_expert","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_expert?post=18229"},{"taxonomy":"qa_category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_category?post=18229"},{"taxonomy":"qa_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_tag?post=18229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}