Sec 56(2) v

This query is : Resolved

ca.singh (Querist)
Follow

10 August 2013 Sir, what tax provisions would be applicable in the books of closely held company, if it issues shares to a resident at face value and not market value.
Eg-
Share Capital and Free reserves of company are 3,87,00,000/- and it has existing share capital of Rs.10,00,000/- divided into shares of Rs. 100/- each. This Company issues fresh shares Rs. 100/-each to existing share holders.
What would be tax implications in the hands of Company and shareholders.

Thank you
Best Regards

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

12 August 2013 Section 56(2)(viib) is applicable only when shares are issued for a premium. This section is NOT APPLICABLE of shares are issued at face value.

Accordingly if shares are issued at face value there is NO taxable income u/s 56(2)(viib).

ca.singh

ca.singh (Querist)
Follow

13 August 2013 Thank you sir,,, :)

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

13 August 2013 You are welcome. You should use the thanks button to convey your thanks.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now