19 October 2009
A private limited co. has collected amount from its share holders as share application money and it is yet to be alloted for to shareholders. It shown as share advance in the B/s for three years. Now the co. has planned to allot the amount. Does the non-allotment violate the provs. of Cos. Act? Can such amount be shown as share advance in the B/s or should that amount be shown as Share Application money receieved?
19 October 2009
You cannot show it as share advance. You can show it as share application money. Please note that you have to allot shares for the shareapplication money received within 4 months as per companies act. Yes non allotoment violate the provisions of companies act and in income tax act the assessing officer in individual assessement can take a step to tax deemed income at certain percentage on unalloted shares amount.
23 October 2009
There is no specific provision in companies or income tax act. The income tax act can apply limitation act if share not alloted till 3 years and add it to the income.
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