Clause (viib) of section 56(2) is triggered at stage of computation of income itself

Clause (viib) of section 56(2) is triggered at stage of computation of income itself

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Clause (viib) of section 56(2) is triggered at stage of computation of income itself when share application money received, from a resident, by a Company, in which public are not substantially interested; is above face value. Thus, aggregate consideration received for shares as exceeds fair market value will be included as income from other sources. However, as per section 68, as substituted with provisos, when resident investor is not able to explain nature and source for credit seen in books of accounts of Company or explanation offered is not satisfactory then entire credit would be charged to income tax for that previous year. Thus, order passed by Assessing Officer to effect that share premium received by assessee on issue of shares was liable to be assessed as ‘income from other sources’ under section 56(2)(viib), even though assessee had disclosed genuineness of persons who purchased shares on a premium could not have been challenged

 

HIGH COURT OF KERALA
Sunrise Academy of Medical Specialities ) (India) (P.) Ltd.

 

 


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