SHARE APPLICATION MONEY

[NABIN AGARWAL]

A Pvt ltd company who has received Share Application Money for Rs. 1Crore in the F.Y. 2013-14 wants to transfer the said application money to Unsecured Loan A/c. Can it do so ?Please give Case Law reference of any High Court or Supreme Court.

[CAGOPALJI AGRAWAL]

It can be done under the instruction of the depositor. It would not violate the provision of section 269SS as held in the case of Lala Murali Lal 2004 -2 SOT 543 = 2002 (7) TMI 749 - ITAT LUCKNOW

AI Summary

Share application money reclassification permitted when done on depositor instruction, avoiding prohibited deposit acceptance consequences. A private limited company may, on the depositor's instruction, transfer received share application money to an unsecured loan account; such a reclassification is a matter of accounting treatment and, where it reflects the applicant's direction rather than a fresh act of deposit-taking, has been held not to contravene the statutory prohibition on acceptance of deposits under relevant tax-administrative precedent.