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June 2026

Income from Other Sources — S. 56 — Buy-back of shares at a price lower than the fair market value — Buy-back of shares as per section 68 of the Companies Act, 1956 — Extinguishment of shares — Cannot be held as purchase of property or acquisition of capital asset — S. 56 (2) (x) not applicable.

By Keshav Bhujle | Ritu Punjabi, Advocates
Reading Time 4 mins

12. Pr.CIT v. Globe Capital Market Ltd.

(2026) 185 taxmann.com 513 (Del.)

A.Y. 2018-19: Date of order 07/04/2026

S. 56 of ITA 1961 and Rule 11UA of the ITR 1962

Income from Other Sources — S. 56 — Buy-back of shares at a price lower than the fair market value — Buy-back of shares as per section 68 of the Companies Act, 1956 — Extinguishment of shares — Cannot be held as purchase of property or acquisition of capital asset — S. 56 (2) (x) not applicable.

The Assessee was engaged in the business of share broking and clearing of trades. In the course of assessment proceedings being conducted u/s. 153A of the Act, the Assessing Officer made an addition of Rs.16.33 crores on account of buy back of shares u/s. 56(2)(x) of the Act. The Assessing Officer held that the Assessee had bought back the shares at the rate of Rs.313.40 per share whereas the fair market value of each shares as per Rule 11UA was Rs.370.46 per share, therefore the difference was taxable u/s. 56(2)(x) of the Act. It was held that though the shares purchased by the Assessee were its own shares, however, shares constitute capital asset and since the shares were purchased by the Assessee at a lower rate

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