Recently, the Mumbai Bench of the Income Tax Appellate Tribunal (Tribunal) ruled that conversion of a company into an LLP (limited liability partnership) firm would be construed as a transfer and thus, be chargeable to tax on the pretext that specific tax neutrality conditions provided in the Income Tax Act, 1961 (IT Act), are not complied with.
Though the tribunal went on to compute the capital gains tax as Nil, it would be worthwhile to discuss the background of this issue to understand the impact of this judgement. The LLP Act provides an enabling provision for conversion of a ...
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