25 October 2012
The new clause (viib) under section 56 of Income Tax Act 1961 provides that where a company in which the public are not substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares and such consideration received 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 chargeable to income tax under the head “Income from other sources”.
Does this clause is applicable on share warrants also i.e. if a company in which the public are not substantially interested issues share warrants at premium, is the premium more than the FMV of shares taxable in the hands of the company?
Please suggest in the matter. Its urgent.
Guest
Guest
(Expert)
25 October 2012
private companies can not issue share warrants, only public companies can issue.
26 October 2012
Thanks a lot Sir. I am having another question. Suppose it is XYZ Ltd in which public is not interested and is a closely held company. Can't it issue share warrants which would be converted into shares? Please suggest.
27 October 2012
CLOSELY HELD COMPANY ITSELF MEANT PVT.LTD.COMPANY SO COMPANY IS LIMITED THEN ITS NOT A CLOSELY HELD COMPANY,AND SAID CLAUSE OF SEC.56 NOT APPLICABLE
27 October 2012
Vivek ji, thanks a lot. Here I am getting some confused. What I meant to say is that XYZ Ltd. is a company which is not a listed company. The shares of the company are with the directors and their relatives. In such a case, can XYZ Ltd. issue share warrants at premium or not and whether Sec 56(2)(viib) is applicable or not?
Guest
Guest
(Expert)
30 October 2012
go through certificate of incorporation of your company if it is public company then it can issue share warrnats
2nd thing sec56(2)(viib) is applicable for shares and not any other thing mentioned, so if we follow companies act then there is distinguish between share and share warrants, so as per my opinion it will not apply for share warrnats
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