No tax on share premium when issued to Venture Capital Fund

Last updated: 21 February 2023
Quick Summary
The Income Tax Appellate Tribunal (ITAT) in Delhi has ruled that no tax is applicable on the share premium received by a company when shares are issued to a venture capital fund. The tribunal upheld the Commissioner of Income Tax (Appeals) decision, dismissing the Revenue Department's appeal. Additionally, the ITAT confirmed that fees paid to a Chartered Accountant firm for valuation certification and retainership are considered revenue expenditure, not capital expenditure.

Court :
ITAT, Delhi

Brief :
The ITAT, Delhi, in ACIT v. Drishti Soft Solutions Pvt. Ltd. [ITA No. 8523/Del/2019 dated February 10, 2023] upheld the order passed by the Commissioner of Income Tax (Appeals) ("CIT(A)") and dismissed the appeal filed by the Revenue Department and held that no tax would be levied on the issue of shares to venture capital fund and further upheld the observation of CIT(A) that, payment for valuation certification and retainership fees to a CA firm is a revenue expenditure.

Citation :
ITA No. 8523/Del/2019 dated February 10, 2023

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Bimal Jain
Published in Income Tax
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