Share-Premium Taxation Cannot Apply Retroactively; Composite Share Receipts Require Component-Wise Verification Under Applicable Credit Rules.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....For assessment year 2011-12, subsequently introduced share-premium taxation and the proviso requiring explanation of a resident shareholder's source of funds do not apply retrospectively. Share receipts must instead be tested under section 68 as then in force. Although an assessee has no automatic obligation to prove the source of source, the investor's bank trail, financial capacity, control of funds and surrounding circumstances remain relevant to creditworthiness and genuineness. Where a composite receipt includes share capital, premium, application money and investment-sale consideration, each component requires separate verification. Corporate and banking records are relevant but not conclusive; review should cover investor capacity, antecedent credits, valuation, underlying investments and commercial rationale.....