TaxTMI 
TaxTMI 
2016 (12) TMI 691
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....oner company was held on 05.08.2016 and the shareholders unanimously resolved as follows: "RESOLVED THAT pursuant to Section 100 to 104 of the Companies Act, 1956, including any statutory amendments or re - enactments thereof and Section 52 of the Companies Act, 2013 and subject to the confirmation by the Hon'ble High Court of Karnataka and subject to such terms, conditions or modifications if any, as may be prescribed by the High Court of Karnataka, the paid-up share capital of the Company be and is hereby reduced from INR 6,36,109 (Rupees Six Lakhs Thirty Six Thousand One Hundred and Nine only) comprising of 6,36,109 (Six Lakhs Thirty Six Thousand One Hundred and Nine) Equity Shares of INR 1/- each to INR ....
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....hares cancelled be paid from the profit and loss account of the Company. RESOLVED FURTHER THAT the Board of Directors of the Company including such other person(s) as may be authorized by the Board of Directors, in this regard, be and are hereby authorized to take necessary action, including making necessary application to High Court or any other competent authority as may be specified in this regard and for following the directions, if any, given by the High Court or any other competent authority as may be specified in this regard, for effecting the reduction of capital in the manner mentioned above." 2. This Court had passed the order on 21.10.2016 after hearing the learned Counsel for the petitioner Mr.Saji P.John....
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....t and Loss Account. He submits that as per the provisions of Section 100 of the Companies Act, 1956, such reduction of share capital requires confirmation by the Court and hence, this petition has been filed before this Court. 3. During the course of arguments, learned counsel for the petitioner-company was also requested to explain the tax implications of such reduction in share capital by utilisation of the share premium account and accumulated profits of the company, upon which, he submitted that the same will be subject to the "Dividend Distribution Tax" over and above the paid up value of each Equity share namely Re.1 per share and since the amount of Rs. 210/- on each share will be paid to the shareholders, which is mainly th....
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....es has filed the report, as also the Income Tax Department has filed the memo today before this Court and they are represented by the respective counsels Smt.Prema Hatti, CGC for Registrar of Companies and Mr.K.V.Aravind for Income Tax Department. 4. From the memo dated 23.11.2016 filed by the Registrar of Companies, paragraph-4 is quoted below for ready reference and from the memo filed by the Income Tax Department also, the relevant portion is quoted below for ready reference. "4. It is noticed from the petition that the company has proposed to return an amount of Rs. 11,08,80,000/- to its shareholders by canceling 5,28,000 issued, subscribed and paid up equity shares of Re. 1 each from the paid up capital of the company by ut....
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....distribution tax on the reduction in share capital as proposed by the Assessee Company, M/s Little Eye Software Labs Private Limited (AACCL3350M). 2. The calculation of dividend distribution tax on account of Capital reduction is as under: Proposed repayment to shareholders Pursuant to capital reduction A 11,08,80,000 Accumulated profits available with the company for distribution as on date of capital reduction B 9,13,71,166 Dividend Distribution Tax under Section 2(22)(d) C=B*20.36% 1,86,03,169 3. Based on the available facts of the case, there may not be an impact on capital gains. This is for your kind information and necessary action. Sd/- Asst. Commissio....
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.... not opposed by the learned counsel for the petitioner company to allow the due process of law under the Income Tax Act to take place in case of any such eventuality in view of the aforesaid. 9. Thus, there is no objection to the reduction of the share capital to be allowed and approved by this Court under Section 100 of the Companies Act, 1956. The same is therefore allowed and the company petition is accordingly allowed. 10. The form of minutes set out herein below is approved in terms of Section 100 of the Companies Act, 1956, subject to the aforesaid; "The paid up share capital of Little Eye Software Labs Private Limited is henceforth INR 1,08,109/- (Rupees One Lakh Eight Thousand One Hundred Nine only) divided into 1,08,....