A company with a share capital of Rs.2 Lakhs each share price is Rs.10 and Reserve of Rs.5 Crores was taken over by new director from the old director only by paying Rs.2 Lakhs i.e. face value of share. Now the question arises the book value of share is many time more than the amount paid by the new director who are two in number and paid Rs.1 Lakh each to the existing two director. As only face value of shares is paid, what is the position of book value minus paid up value in the hands of the buyer. Whether the buyer will have to pay tax on the difference. The case relates to assessment year 2016-17. Please give your views.
CA S. K. Goyal