POST SHUT DOWN EFFECT CORPORATE TAX PLANNING

• POST SHUT DOWN TAX EFFECTS
• CORPORATE TAX PLANNING
• MEANING

1.  IT MEANS A COMPLETE CESSATION OR CLOSING DOWN OF THE BUSINESS. IT INVOLVES THE FOLLOWING:-
2. NO BUYING AND SELLING
3. NO MANUFACTURING
4. ASSETS TO BE SOLD
5. RETURNING THE CAPITAL TO OWNERS ETC

• TAX PROVISIONS ( 176)

1. ON DISCONTINUATION IN ANY ASSESSMENT YEAR, THE INCOME OF PERIOD FROM THE EXPIRY OF THE PREVIOUS YEAR TO DATE OF SUCH DISCONTINUANCE, TAX WILL BE CHARGED AT THE DISCRETION OF ASSESSING OFFICER
2. THE TOTAL INCOME OF EACH COMPLETED PREVIOUS YEAR OR PART OF ANY PREVIOUS YEAR INCLUDED IN SUCH PREVIOUS PERIOD WILL BE CHARGEABLE AT RATES IN FORCE IN THAT ASSESSMENT YEAR.
3. NOTICE OF SUCH DISCONTINUATION SHOULD BE GIVEN TO ASSESSING  OFFICER IN FIFTEEN DAYS
4. ANY SUM RECEIVED AFTER THE DISCONTINUATION WILL BE DEEMED INCOME OF THE RECIPIENT AND CHARGED TO TAX ACCORDINGLY
5. EVEN BUSINESS/PROFESSION DISCONTINUED DUE TO DEATH OR RETIREMENT, ANY SUM RECEIVED AFTER DISCONTINUATION WILL BE TREATED INCOME OF THAT PERSON AND CHARGED ACCORDINGLY.
6. NOTICE ISSUED BY ASSESSING OFFICER UNDER 142 WILL BE SERVED ON THE PERSON WHOSE INCOME IS TO BE ASSESSED OR IN CASE OF ANY PARTNER AND IN CASE OF COMPANY THE PRINCIPAL OFFICER

• TAX PROVISIONS (177)

1. PROVISION RELATING TO DISSOLUTION OF ASSOCIATION OF PERSONS:-
2. ASSESSING OFFICER WILL MAKE THE ASSESSMENT AS NO DISCONTINUATION HAD TAKEN PLACE ALL THE PROVISIONS WILL BE APPLICABLE.
3. ASSESSING OFFICER MAY IMPOSE PENALTY IF THEY FOUND AOP WERE FOUND TO GUILTY OF ANY OF THE ACTS SPECIFIED IN CHAPTER XXI
4. EVERY PERSONS WHO ARE MEMBERS AT THE TIME OF DISCONTINUATION AND LEGAL REPRESENTATIVE OF DECEASED MEMBERS SHALL BE JOINTLY AND SEVERALLY LIABLE
5. NOTHING IN THIS SECTION WILL EFFECT THE PROVISIONS OF 159

• TAX PROVISIONS ( 178)

1. PROVISIONS RELATING TO COMPANY IN LIQUIDATION
2. LIQUIDATOR HAS TO GIVE NOTICE OF HIS APPOINTMENT TO ASSESSING OFFICER WITH IN 30 DAYS.
3. THE ASSESSING OFFICER CAN MAKE ANY INQUIRY AND ASK FOR ANY INFORMATION WITH IN THREE MONTH FROM THE DATE OF SUCH RECEIPT.
4. CAN PART WITH ASSETS EITHER WITH THE PERMISSION OF CHIEF COMMISSIONER OR COMMISSIONER OR WHEN NOTIFIED BY THE ASSESSING OFFICER.
5. FAILURE TO GIVE NOTICE OR PARTING OF ASSET WITHOUT LEAVE OR NOTIFICATION HE IS PERSONALLY LIABLE FOR THE PAYMENT OF TAX.

• LIABILITY OF DIRECTORS( PVT CO)SEC 179

1. IF ANY TAX DUE ON DISCONTINUATION OF PVT COMPANY COULD NOT BE RECOVERED IT WILL BE RECOVERED FROM EVERY PERSON WHO WERE DIRECTORS AT THAT TIME UNTIL THEY PROVE RECOVERY OF TAX IS NOT ATTRIBUTED TO THEIR NEGLECT
2. WHEN ON CONVERSION OF PVT COMPANY INTO PUBLIC COMPANY IF ANY TAX DUE ON PVT COMPANY WILL NOT BE RECOVERED FROM ITS DIRECTORS.

• TAX IMPLICATION

1. TREATMENT OF BUSINESS LOSSES: FROM 2000-2001 IT CAN BE SET OFF AGAINST THE FUTURE PROFITS OF OTHER BUSINESS
2. UNABSORBED DEPRECIATION : CAN ALSO BE SET OFF AGAINST THE FUTURE PROFITS OFF THE BUSINESS
3. PROFIT OR LOSS ON SALE OF THE ASSETS OF DISCONTINUED BUSINESS:-
4. IF SALE PROCEEDS ARE GREATER THAN W.D.V OF BLOCK THEN IT WILL BE TREATED AS SHORT TERM CAPITAL GAIN
5. IF W.D.V OF BLOCK IS GREATER THAN SHORT TERM CAPITAL LOSS
6. IF ASSETS ARE NON DEPRECIABLE THEN IF THERE IS PROFIT THEN IT WILL DEPEND UPON NATURE OF ASSETS WHETHER SHORT TERM OR LONG TERM.
7. SET OFF AND CARRY FORWARD LOSSES
8. SHORT TERM LOSS CAN BE SET OFF ANY OTHER SHORT TERM GAIN OR LONG TERM GAIN BUT LONG TERM GAIN CAN ONLY BE SET OFF AGAINST ANY OTHER LONG TERM GAIN
9. IF STOCK/GOODS ARE SOLD ON PROFIT IT WILL BE TREATED AS BUSINESS INCOME OF THE PREVIOUS YEAR IN WHICH IT IS SOLD.
10. SALE OF ASSETS UNDER SCIENTIFIC RESEARCH
11. WITHDRAWAL OF CERTAIN INCENTIVE DEDUCTION

• TAX PLANNING

1. DECISION RELATED TO PROFIT EARNING BUSINESS:
2. HAVING PROFIT BUT NO PAST LOSSES AND UNABSORBED DEPRECIATION
3. HAVING PROFIT BUT WITH PAST LOSSES AND UNABSORBED DEPRECIATION
4. LOSS GENERATING BUSINESS
5. WHILE DISCONTINUING COMPANY
6. WHETHER SELLING BUSINESS AS SLUMP SALE IS BENEFICIAL OR NOT