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issue of share at premium

Pawan Singhal (chartered accountant) (655 Points)

29 January 2010

One of my client (Pvt. Ltd. Co.)issue share Face Value 10 and on Rs. 90 Rs. Premium . co. is a private limited company and it is newly formed. Now ITO Want justification For Rs. 90 premium per share . If you have any case law or justification please provide me.

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CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 30 January 2010

Pawan..

ITO shud concern wid only those matters which can be added to the income.. I dont think that he can ask for Premium Justification.. but i know that we cant object him practically..

So if u don't get any case law on this, then i suggest u to prepare an statement in which projection of future profit is incorpoarted n set ur EPS in such a way so that EPS*P/E Ratio will be equal to Rs 100 approx.. this way u can justify him...

I think, premium justification is just a tool for him for negotiation (i think u get my point)..

Adarsh

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