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conversion of company into LLP

Started by ketanvyas1975, December 24, 2014, 06:17:13 PM

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In case of exemption under section 47(xiib) in case of conversion of company into LLP, there is a restriction that the resrves shall not be taken away directly or indirectly by partners for a period of 3 years after such conversion.

further, in case of such conversion, the company is treated to have been wound up in which case section 2(22)(c) comes into play which taxes distribution of accumulated profits as dividend and subject to dividend distribution tax.

My question is if in case of conversion, there is a lock in period for reserves, does section 2(22)(c) apply? in other words, should there be restriction on distribution of reserves even after payment of DDT?

Kindly share your views on this.