It notice for issuing shares at face value
Swati Sharma (TRAINEE) (328 Points)
29 December 2016Swati Sharma (TRAINEE) (328 Points)
29 December 2016
A.Gopal
(Partner)
(63 Points)
Replied 30 December 2016
Rule 11UA(2) clause (a) or clause (b) are the relevant poritons which prescribe for determination of fair market value or determination of valuation under an auditor's certificate of issue of shares falling under sec 56 (2)(viib) of the Act.
To invoke this section and the rule there to, to bring to tax as income the consideration for issue of shares should exceed the face value of shares.
If the consideration received is at par then this section cannot be invoked or a valuation under fair market value method or under discounted cash flow method be insisted.
In your case the issue being at par the officer is not correct in raising an objection.
Other than Sec 56(2)(viib), no other section of the act stipulates the condition put forth by the officer.
LIVE Course on Foreign Exchange Management Act (FEMA)(with recording)
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