21 May 2013
1 of my client on advice of some CA deposited 45 lakh rs premium each in cash in private ltd company in which there were two directors. (Total 90 lakhs)
The source of cash is unexplained. He has neither filed with MCA 21 nor with income tax The company has not yet started business.
What are the income tax implications of share premium and what should be done.?
24 May 2013
Section 68 will be applied in this case. The amount will be taxable in the hands of the company in which he has invested unless he is able to explain the source of the sum and this explanation is found to be satisfactory by the Assessing Officer.
There is also a risk of double jeopardy - this amount can also be taxed in the hands of your client u/s 69 as an unexplained investment if it is not reflected in his books of accounts.
08 July 2013
In addition to section 68 provisions of section 269SS & T shall also be attracted where the penalty is equal to the amount. At the same time since the source is not known the provisions of Section 271(1)(c) will also be attracted. Do not forget the read the provisions of Section 271D.
So kindly reverse the entry and avoid all the above provisions
CAclubindia
