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Rs. 462 cr given to Anil Ambani by Brother Mukesh Ambani is a Gift or a Loan? Will it be taxed in hands of Anil Ambani?
Shares of Reliance Communications further zoomed 10 per cent to hit the highest trading permissible limit for the second day in a row on Wednesday after the company cleared dues of Swedish service provider Ericsson. The scrip raised sharply by 10 per cent to Rs 4.84 its upper circuit limit on the BSE
Billionaire Anil Ambani Monday warded off a possible jail term as RCom cleared dues of Ericsson with the money received from elder brother Mukesh and his wife Nita, whom he thanked for standing by him in trying times and extending “timely support”.
Anil’s heavily debt-laden Reliance Communications made a Rs 550-crore payment, including interest, to Ericsson just a day before expiry of the deadline set by the Supreme Court to clear dues or face a three-month jail term
In a statement, RCom said the payment of Rs 550 crore dues to Ericsson, including interest dues, has been made in compliance with the Supreme Court judgement. However in the statement of R Com it did not say specifically if it was gift or grant.
The funds provided to clear the dues – were a grant and not a loan, people familiar with the matter said as per the sources. The payment to Ericsson was made through Reliance Infocomm Infrastructure, a subsidiary of RCom which is a telecom tower and fiber infrastructure provider. RCom has voluntarily file for bankruptcy protection in the National Company Law Tribunal (NCLT).
Under Section 56 (2) (x) of the Income Tax Act, when a gift is made to a relative, there is no tax implication on the receiver as it is exempt from Income Tax. The nature of the backing or how it was delivered was unclear, but in a statement Anil Ambani thanked his billionaire brother “for standing by me during these trying times, and demonstrating the importance of staying true to our strong family values by extending this timely support”. RCom called off the sale of its telecom assets to Reliance Jio Infocomm, the mobile telecoms firm controlled by Mukesh Ambani, citing failure to get approvals from lenders and the government.
If Mukesh has given it as loan it needs to be repaid by Anil as per the terms between them. However in case of gift the same need not be paid back. It would be interesting to see how RCom share holder and company will get any benefit from the above transaction.