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CASH PAYMENT FOR ALLOTMENT OF SHARES

This query is : Resolved 
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Guest

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Guest (Querist)
11 June 2009 I have come across a situation where the director himself for the allotment of shares in his name paid cash Rs.5 Lacs (which includes Rs.200000/- for Securities Premium Amount) to the company, wherein he is a director. If the cash transaction is permissible, I need the relevant provisions like circular or notification indicating that an investment (includes Securities Premium
Amount) of any sum by way of cash does not have tax impact / liability from the Income Tax angle so far as the cash transaction. Once again, Thanks for your response.
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Aditya Maheshwari

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Aditya Maheshwari (Expert)
14 June 2009 There was a case law by the honourable Income Tax Appellate Tribunal where share application could not be received in cash and the same was considered to be covered by the provisions of Section 269SS & 269T of the Income Tax Act. So if the transaction can be reversed then please see.
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