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ITAT held that the allotment of shares at a lesser price than to a third party cannot be taxed u/s 28(iv) of the Income Tax Act, 1961. The receipt of property without consideration or for lesser consideration is taxable only u/s 56(2)(x)(c). In the absence of a charging provision, such a transaction of acquiring shares at par value compared to premium paid by a third party cannot be taxed. Furthermore, the transaction of acquiring shares is a capital field transaction, not a revenue field transaction. If the benefit does not arise from business or profession, it cannot be taxed u/s 28(iv). Since the income from sale of shares is taxable as capital gains, the acquisition cannot be treated as a revenue transaction. The decision was in favor of the assessee.
ITAT held that the allotment of shares at a lesser price than to a third party cannot be taxed u/s 28(iv) of the Income Tax Act, 1961. The receipt of property without consideration or for lesser consideration is taxable only u/s 56(2)(x)(c). In the absence of a charging provision, such a transaction of acquiring shares at par value compared to premium paid by a third party cannot be taxed. Furthermore, the transaction of acquiring shares is a capital field transaction, not a revenue field transaction. If the benefit does not arise from business or profession, it cannot be taxed u/s 28(iv). Since the income from sale of shares is taxable as capital gains, the acquisition cannot be treated as a revenue transaction. The decision was in favor of the assessee.
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