TaxTMI 
TaxTMI 
Clarification regarding nature of share Buy-back transactions under Income-tax Act, 1961
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature of share Buy-back transactions under Income-tax Act, 1961-regd. As per provisions of Section 46A of the Income-tax Act, 1961 ('Act'), applicable with effect from 01.04.2000, any consideration received by a shareholder or a holder of other specified securities from any company on purchase of its own shares/other specified securities shall be, subject to provisions contained in sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r section 115Q of the Act w.e.f. 01.04.2003 till 31.05.2013 are being interpreted in a conflicting manner by the tax authorities and taxpayers, thereby giving rise to disputes on this issue. It has been contended that subsequent to introduction of section 115QA in the Act and placing reliance on a decision of the Authority for Advance Ruling (AAR No. P of 2010), income-tax authorities, in some cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ising out of the provision to allow buy-back of shares by the companies- 28.1 The Companies (Amendment) Ordinance, 1998 [subsequently enacted as the Companies (Amendment) Act, 1999], inserted section 77A in the Companies Act, 1956, which allows a company to purchase its own shares subject to certain conditions. The shares bought back have to be extinguished and physically des....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... new clause to provide that dividend does not include any payment made by a company on purchase of its own shares in accordance with the provisions contained in section 77A of the Companies Act, 1956. It has also inserted a new section, namely, section 46A in the income-tax Act, to provide that any consideration received by a shareholder, or a holder of other specified securities from any company ....