Allotment of new shares by a company is not ‘transfer’ – ITAT Rajkot




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Allotment of new shares by a company is not ‘transfer’ – ITAT Rajkot

 

Section 56(2)(vii)(c)(ii) of Income Tax Act 1961 provides that if an individual or HUF receives any property for a consideration less than its market value, the difference will be taxed as other income. The question here is whether this provision will get attracted when amalgamated public company issues new shares as per scheme of amalgamation sanctioned by High Court/ NCLT? ITAT Rajkot has held: NO.

ITAT Rajkot vide order dated 31.12.2024 held that above provision is applicable only in case of individual and HUF and not public company. Allotment of new shares by a company is not ‘transfer’. The scheme is duly sanctioned by High Court/NCLT and there is no anti-abuse of the provision.

The copy of the order is as under:

1737335838005




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