Further allotment of shares by closely held company
Whether a profit making Pvt Ltd Company can issue shares to its members at face value.
PLease explain Section 56(2)(viia) of the Income Tax Act
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Allotment of shares
Replies (1)
Hi,
From corporate law viewpoint, you can issue shares at face value to the members. There is no bar in it....
But from income tax viewpoint, it would lead to extra taxes in the hands of the company if it issues shares at a price lower than its fair market value...Refer section 56 of the IT act....
Regards
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