| Question And Answer | |
|---|---|
| Subject: | Sec. 56(2)(viib) |
| Category: | Income-Tax |
| Querist: | manali |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Market value of shares, valuation |
| Date: | December 15, 2022 |
Assessee is private limited co , which is 100% subsidiary of listed Public Limited co. In the scrutiny proceedings for A.Y. 20-21, Assessing officer has show cause as to why the Share Premium received by the company in the financial year 2010-11 and 2012-13 and 2013-14 should not be added by invoking the provisions of Sec. 56(2)(viib) , since as per his interpretation the words used ” any previous year” in the section authorizes him to make such addition. Assessee submitted that these provisions are not applicable for the share premium received in the F,Y, 2010-11 and 12-13 and even for 2013-14 since the premium is received on the basis of Market value of shares as determined in a manner prescribe in the Act. However, AO is proceeding to make an addition of entire share premium in the A.y. 20-21. whether the action of the AO is justified. pl guide
The Hon’ble Calcutta High Court in the case of PCIT v. Trimex Fiscal Services (P.) Ltd. [2022] 141 taxmann.com 524 (Cal)(HC) observed that in terms of clause (viib) of section 56(2) where a company not being a company in which public are substantially interested, receives, in any previous year from any person being a resident, any consideration for issuance of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds fair market value of shares shall be deemed to be the income of that company chargeable to income tax for the previous year in which such failure has taken.