Question ID :
44747
Income Tax Treatment of Conversion of Proprietorship into LLP
I have converted a Proprietorship into LLP w.e.f. 08.04.2024 and all the assets and liabilities of the said proprietorship have been transferred into LLP. Thus, Sale from 01.04.2024 to 07.04.2024 are in the proprietorship firm and from 08.04.2024 onwards the sales and all the business transactions are appearing in the LLP. Now my questions are:
1. What will the tax treatment in the hands of the person whose business has been transferred into LLP ?
2. How will the ITR of that person be filed ?
3. What entries are required to be made in his ITR with respect to the transfer of business to LLP?
Posted by
Gaurav Kumar Baranwal
on
Nov 13, 2024
Filed Under
DIRECT TAXES
1. Depending on values adopted for transfer, there is a chance of Short Term Capital Gain for Depreciable Assets and Long or Short Term Capital on Immovable Properties, if any. Hence the Proprietor necessarily to declare the above in his IT Return of FY 2024-25.
2. ITR will be filed, declaring Sales from 1st to 7th as business income and capital gains as mentioned above.
3. The net of Assets and Liabilities will be treated as 'Unsecured Loan/current liability' or 'Loans and advances or Current Asset' in the books of Proprietor and also in the books of LLP.
Posted by
Rupakula Rajasekhar on
Nov 27, 2024