X Ltd., closely held company receives shares of A Ltd. (a listed public company) for 10,000 whose fair market value is 5,00,000. What is the taxability of X Ltd.?
19 August, 2015
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Taxability of discounted transfers to closely held companies: listed company shares are excluded from gift inclusion, so not taxable.
Receipt of listed public company shares by a closely held company for consideration below fair market value does not attract tax under the provision addressing gifts to firms and closely held companies, because shares of a listed company are excluded from that inclusion and therefore are not characterized as taxable income from other sources under that rule.
Note: It is a system-generated summary and is for quick reference only.