Section 56(vii) and section 56(viia)

56(2)(viia): Receipt of shares by a firm or closely held Company.

Applicable if:

1. Shares belong to a closely held company.

2. Donor is any person.

Without Consideration: if Fair Market value is more than Rs.50000/-:

For Donor: No Capital Gain because u/s 47(iii) it is not consider transfer.

For Donee: FMV is income from other Sources u/s 56(2)(viia).

Inadequate Consideration: if the difference of consideration and FMV is greater than Rs.50000/- than difference amount will be taxable for receiver.

For Donor: Capital Gain will be sale price – COA.

For Donee: Difference of FMV and Consideration is income from other Sources u/s 56(2)(viia).

However AOP/BOI,Turst are not covered dat y 56(2)viia not applicable.