Sec 56(viia) of the Income Tax Act brings into the tax net differential value of the shares transferred by a person to a company, at a price less than the fair market value.
Also, in the case of Anarkali Sarabhai vc. CIT, it was decided that redemption of preference shares is considered as relinquishment of asset and thus, a transfer.
Thus, please suggest if redemption of preference shares at a price less than the fair market value will attract the provisions of sec 56(viia) and tax the differential price as income from other sources in the hands of the company
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