Sec 56(2) v
This query is : Resolved
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
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
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).
Accordingly if shares are issued at face value there is NO taxable income u/s 56(2)(viib).
13 August 2013
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