TaxTMI 
TaxTMI 
TaxTMI 
taxability u/s 56(2)(vii)
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....axability u/s 56(2)(vii)<br> Query (Issue) Started By: - SANJAY RAWAL Dated:- 17-6-2011 Last Reply Date:- 26-6-2011 Income Tax<br>Got 2 Replies<br>Income Tax<br>Fair market value of share per rule 11UA of Income Tax Act, 1961 is Rs 50.00 against a face value of Rs10.00.It issues fresh Equity share at face value of Rs 10.00. Will the difference between Fair Market Value aand issue price be taxable ....
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....u/s 56(2)(vii) Reply By Surender Gupta: The Reply: Where the transaction is falling within the mischief of section 56(2)(vii) or (viia), that difference between Fair Market value and issue price shall be taxable read with rule 11UA. However, the difference amount should be exceeding Rs. 50,000/- Reply By DEV KUMAR KOTHARI: The Reply: Applying / subscribing for shares and / or getting allotment....
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.... of shares cannot be called ' received property ' in the context of S. 56 (2) (vii) and (viia). In case of receives property - there should be an existing owner of property who gives property to another person. In case of allottment, there is no such situation- the shares are not owned by company, they come into existence on allotment. There is no person who gives and no person who receives ....
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....shares that were in existance earlier. Therefore, in case of initial issue / right issue,/ preferential issue or bonus issue the deemed income rule of S. 56 will not apply. However, as usual disputes are likely to take place. In case of allotment to employee - there can be case of perquisite also if shares of employer company is issued TO EMPLOYEES at lower price as compared to issue price fo....
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....r otehr persons.<br> Discussion Forum - Knowledge Sharing ....