New section 56(2) has been inserted in case of a company not being a company in which public are substantially interested wherein the Share premium received by the company on issue of shares in excess of the Fair Market Value to be treated as income under the head ‘Income From Other Sources’ (w.e.f 1/04/2013).
Please guide me how to calculate the FMV of the shares? ?
24 March 2012
those rules are for the purposes of section 56(2)(v ii) new claue viib reads as under ‘(viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund. Explanation.—For the purposes of this clause,— (a) the fair market value of the shares shall be the value— (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; It is provided that (a) the fair market value of the shares shall be the value— (i) as may be determined in accordance with such method as may be prescribed so wait for rules CA MANOJ GUPTA JODHPUR 09828510543
28 March 2012
Manoj Sir, that was really well explained. I have a query regarding this. With this provision, can a newly formed company issue its shares at premium and how? I request you to explain the thing.
CAclubindia
