Taxability on Issue of Right Issue of Shares by Unlisted Public Company

[Hithik]

Dear Experts,

In the case of a rights issue of shares at a price lower than the FMV as determined under the prescribed Rules, would the allotment of such shares be regarded receipt of property for the purposes of the relevant provisions of Section 92 of Income Tax Act 2025, thereby attracting tax implications?

Considering the above CBDT circulars Circular No. 10/2018 dated 31 December 2018, Circular No. 2/2019 dated 4 January 2019, along with the judicial precedents on the interpretation of the term 'receives', can it be concluded that shares allotted pursuant to a rights issue, even if issued below FMV, would not attract the provisions of Section 92?

Thank you in advance!!

AI Summary

Rights share allotment below fair market value raises whether allottees receive taxable property under the relevant income-tax provision. A rights issue of shares by an unlisted public company below fair market value raises whether the allottee receives property for tax purposes under the relevant income-tax provision. The query seeks to examine CBDT circulars and judicial interpretation of 'receives' to determine whether shares allotted under a rights issue, despite being issued below fair market value, are excluded from that provision. No adjudicatory conclusion is stated.