Merger of partnership firm

[rudra madhab sahoo]

Dear Members,

 

Can anyone guide me on the following ?

 

1. Can a Partnership Firm merge with a unlisted public company ? If yes, what is the procedure.

 

With Best Regards,

 

Cs Rudra Madhab Sahoo

[Vivek Hegde]

Dear Sir

Answer is Yes. Options available are:

1) Convert firm into pvt co under Part-IX and make it subsidiary of existing co.

2) To increase the number of partners to 8 or above (if it is less than 8) and file application for merger of the firm with the High Court u/s 391. Kindly note that as per Section 390 read with Section 582(b) of the Act, the firm will be treated as an unregistered company and can be merged with existing pvt co.

3) To make agreement for slump sale of the undertaking of the firm (alongwith its all assets & liabilities as a going concern) to the existing pvt. co.

4) Make the unlisted public co a partner in the firm.

Regards

Vivek Hegde

However, first two options should be preferred to avoid any litigation or dispute at any future date.

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Warm Regards

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
No. 405, 4th Block, 7th Cross
Koramangala, Bangalore-560034
Mob: 09019756940/09900898223

[rudra madhab sahoo]

Thanks a lot.

 

In case of slump sale, what is the tax point of view.

[Vivek Hegde]

Dear Sir

It should be in line with Section 50B:

Special provision for computation of capital gains in case of slump sale.

50B. (1) Any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place :

Provided that any profits or gains arising from the transfer under the slump sale of any capital asset being one or more undertakings owned and held by an assessee for not more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets.

(2) In relation to capital assets being an undertaking or division transferred by way of such sale, the “net worth” of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48.

(3) Every assessee, in the case of slump sale, shall furnish in the prescribed form ⁴⁹ along with the return of income, a report of an accountant as defined in theExplanation below sub-section (2) of section 288, indicating the computation of the net worth of the undertaking or division, as the case may be, and certifying that the net worth of the undertaking or division, as the case may be, has been correctly arrived at in accordance with the provisions of this section.

 ⁵⁰[Explanation 1.—For the purposes of this section, “net worth” shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account :

Provided that any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth.

Explanation 2.—For computing the net worth, the aggregate value of total assets shall be,—

           (a)   in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (i) of sub-clause (c) of clause (6) of section 43;  ⁵¹[***]

       ⁵²[(b)   in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and

           (c)   in the case of other assets, the book value of such assets.]]]

Vivek

On Wed, Jan 19, 2011 at 1:57 PM, rudra madhab sahoo <csub...@gmail.com> wrote:

Thanks a lot.

 

In case of slump sale, what is the tax point of view.

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