Total value of assets of a private company or unlisted company not to exceed ` 5 crore in any of the three preceding previous years for exemption of transfer of capital asset or intangible asset on conversion of such company into LLP [Section 47(xiiib)]

Effective from: A.Y.2017-18

(i) Under section 47(xiiib), any transfer of a capital asset or intangible asset on conversion of a private company or unlisted public company to a Limited Liability Partnership (LLP) shall not be regarded as transfer for levy of capital gains tax, on fulfilment of certain conditions.

(ii) The proviso to section 47(xiiib) stipulates the various conditions to be fulfilled for the transaction to not constitute a transfer for the purpose of capital gains. One of the conditions is that the company’s gross receipts, turnover or total sales in any of the preceding three previous years should not exceed ` 60 lakh.

(iii) Clause (ea) has been inserted in the said proviso to stipulate an additional condition for claim of exemption under section 47(xiiib). Accordingly, the total value of assets as appearing in the books of account of the company in any of the three previous years preceding the previous year in which the conversion takes place, should not  exceed ` 5 crore.