February 2020

Section 56(2)(viib) – When there was no case of unaccounted money being brought in the garb of share premium, the provisions not attracted

Jagdish D. Shah | Jagdish T. Punjabi
Chartered Accountants

11. Clearview Healthcare Pvt. Ltd. vs. ITO (Delhi) Member: H.S. Sidhu (J.M.) ITA No. 2222/Del/2019 A.Y.: 2014-15 Date of order: 3rd January, 2020 Counsel for Assessee / Revenue: Kapil Goel / Pradeep Singh Gautam

 

Section 56(2)(viib) – When there was no case of unaccounted money being brought in the garb of share premium, the provisions not attracted

 

FACTS

The issue before the Tribunal was about taxability or otherwise of share premium received on shares issued by the assessee company u/s 56(2)(viib). The assessee was incorporated on 29th January, 2010. During the year under appeal, the company had issued shares at premium. According to the AO, the difference between the share premium received and the share valuation determined under Rule 11UA amounting to Rs. 9.20 lakhs was the income of the assessee as per the provisions of section 56(2)(viib). On appeal, the CIT(A) confirmed the AO’s order.

 

Before the Tribunal, the assessee referred to the Explanatory Memorandum to the Finance Act, 2012 and contended that the legislative intent was to apply the said provisions only where, in the garb of share premium, money was received which was not clean and was unaccounted. According to the assessee, the lower authorities have applied the provisions of section 56(2)(viib) without any finding that the money was not clean money. It was also pointed out that in the subsequent year, on 1st December, 2014, the company’s shares were sold by one of its shareholders to a non-resident at a price which was higher than the price at which the shares were issued by the company. And the said price was accepted by the tax authorities in the shareholder’s tax assessment.

HELD

The Tribunal agreed with the assessee that the provisions of section 56(2)(viib) would apply only when money received was not clean and was unaccounted money, received in the garb of share premium as mentioned in the Explanatory Memorandum to the Finance Ac

--->

Past Issues

Flip-Book
HTML View
Current Issue