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Sec 56(2) v

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(Querist)
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
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
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).
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ca.singh

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ca.singh (Querist)
13 August 2013 Thank you sir,,, :)
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
13 August 2013 You are welcome. You should use the thanks button to convey your thanks.
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