New private limited share issue at premium

This query is : Resolved

Guest

Guest (Querist)

14 December 2012 Respected Members,
One newly incorporated pvt ltd co. wants to issue shares at premium.
Facevalue =10Rs.
Premium =90Rs.
Please advise me what pros and cons should i have to take care with regard to Income tax act & Corporate law.
From both Company & his shareholder Point of view.

PLEASE ADVICE ME ON THIS ISSUE.
THANKS IN ADVANCE.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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14 December 2012 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 shall be the income of the company-Section 56(2)(VIIb)

Guest

Guest (Querist)

15 December 2012 Thanks Amit Sir.
my another question is if a individual buy the shares of above mentioned co. and pays amount which is more than 50000/-Rs. to the share book value, so in that case the diffrence (which is security premium) will be treated his other sources income.
This co is non listing and this person is one of relative of the directors and this is first time share transfer.

Thanks again for your precious Time and Advise.

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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15 December 2012 Book value is not relevant.The differece between fair mkt value and share price received is treated as income from other sources.

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