205C

Ankit,
 

My views to your query no.2:

A.For the company:

a) As share application money is a capital reciept, there can be no charge on it as income in the absence of specific provision.

b) Section 269SS is attracted based on the Jharkhand HC's decision in the case of Bhalotia Engineering Works pvt ltd (275 ITR 399)

B. For the promoters:

Karnataka HC in the case of BPL Sanyo Finance has held that forfieture of share application money can be treated as capital loss (312 ITR 63) - note that the shares were alotted in this case.

In your given case, as the shares are not allotted, there cannot be a capital loss as no right is extinguished to fall under the definition of transfer.

Thank you for the query; looking forward for superior guidance.

Broadening scope of query...

Is there any time limit to allot share of the share application money received. As per Companies Act, 1956 shares needs to be alloted in reasonable time.

Regards

Jaideep Pandya

Dear Jaipdeep,

Share Application Money if recived from PROI would be Covered under FEMA Provisions and Receiving company must allot or refund within 180 Days and file FC GPR for the Same with their respective AD's.

But if Money is From PRI then no Such Provisions. But the Company must ensure that it allots/refunds in atleast 7 Years to avoid implications of S.205C(2)(b) of companies Act,1956.

Thanks Ankit...