Section 56(2)

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Gaurav (Querist)
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13 August 2013 If a pvt. ltd. company purchases shares of other pvt. ltd. company at a value less than FMV, then section 56(2) is applicable or not

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 August 2013 Section 56(2)(viia) applies when shares of a PRIVATE COMPANY are acquired by another PRIVATE COMPANY without consideration or for a consideration which is LESS than the FMV by an amount exceeding Rs. 50,000

Accordingly, if the difference between the FMV and the consideration exceeds Rs. 50,000 then Section 56(2)(viia) will be applicable and the whole FMV shall be the income of the purchaser company.

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