Taxability of premium amount on issue of equity shares

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This query is : Resolved

CA Sanjay Baheti (Querist)

29 June 2013 Dear Experts,

One of my client being a private Limited Incorporated in 2004.This company is closely held i.e. all shares are holding in the name of Directors & their relatives such as Directors Wife,Mother & their HUFs. During the F.Y.2012-13 the Co.has allotted 80000 Equity Shares to their Directors,Directors relatives & their HUF at the rate of Rs.10/- plus Rs.40/- as premium thereon by filing of Prescribed ROC returns.That means a Share premium Account is created with Rs.3200000/- & same is shown in reserves & surplus.

Now query is whether such issue of Equity Shares at premium is subject to tax or not.

If yes,Please elaborate the relevant provisions of I.T.Act with the date of Applicability.

Please treat it as most urgent & reply immediately.

Regards

CA SANJAY BAHETI

Rupesh Jain

Rupesh Jain (Expert)

29 June 2013 share premiuim is not taxable under income tax act

share issued by co. and share premium on allotment of shares recd by co. it is part of co capital a/c

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