Income u/s 56(2) of income -tax act

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SURINDER SINGH (Querist)
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14 June 2013 A pvt. ltd. company with book value of Rs. 30 per share proposes to issue 5 lacs shares of Rs. 10 each at par .Is the diff. of Rs. 20 per share taxable in shareholder hand as per amended provision of sec. 56(2)(vii).kindly also give the relevant citation/ notification etc. .An early response shall be highly appreciated.Thank you

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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14 June 2013 As per explanation to Section 56(2)(vii) shares are treated as property.
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Section 56(2)(vii) (c)(ii) covers the situation, where the consideration is less than the FMV. Since the difference exceeds 50000/- it will be taxable as income.
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SURINDER SINGH

SURINDER SINGH (Querist)
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14 June 2013 If the company capitalises reserves to bring down the F.M.V . will the bonus issue also attract tax u/s 56(2) {shares issued for free }