10 August 2013
Sir, what tax provisions would be applicable in the books of closely held company, if it issues shares to a resident at face value and not market value. Eg- Share Capital and Free reserves of company are 3,87,00,000/- and it has existing share capital of Rs.10,00,000/- divided into shares of Rs. 100/- each. This Company issues fresh shares Rs. 100/-each to existing share holders. What would be tax implications in the hands of Company and shareholders.
12 August 2013
Section 56(2)(viib) is applicable only when shares are issued for a premium. This section is NOT APPLICABLE of shares are issued at face value.
Accordingly if shares are issued at face value there is NO taxable income u/s 56(2)(viib).
CAclubindia
