CASH PURCHASE OF SHARES

[NAMAN DOKANIA]

Can mr. A purchase shares of company amounting to rs. 30000/- in cash??

Is there any tax implication on the same with respect to income tax as well as Companies Act 2013

[SayadAziz Ahmad]

Pl. Refer case law Swati Luthra vs. ITO Delhi 2019 (7) TMI 526 - ITAT DELHI. In this case the honourable court geld that there is no interference in law which prohibits sale of shares in cash. The only look out is that the onus of prving genunity of the transactions will be on the shoulder of the assessee. So all legal formalities for transfer of shares should be made perfect in all respect.

AI Summary

Cash purchase of shares: permitted but onus to prove genuineness and comply with transfer formalities. Cash acquisition of shares is not per se prohibited, but the onus of proving genuineness of the transaction falls on the purchaser; the purchaser must complete and preserve all share transfer formalities and supporting documentation. The response does not identify specific income-tax or Companies Act consequences, instead stressing documentary compliance and readiness to meet scrutiny.