Clarification regarding applicability of section 56(2)(viia) of the Income-tax Act, 1961 for issue of shares by a company in which public are not substantially interested.

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..... the 31st of December, 2018 Subject: Clarification regarding applicability of section 56(2)(viia) of the Income-tax Act, 1961 for issue of shares by a company in which public are not substantially interested-reg. Section 56(2)(viia) of the Income-tax Act, 1961 ( Act ) provides for taxation of income where a company in which public are not substantially interested ( specified company ) .....

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..... said clause:- .In order to prevent the practice of transferring unlisted shares at prices much below their fair market value, it is proposed to amend section 56 to also include within its ambit transactions undertaken in shares of a company (not being a company in which public are substantially interested) either for inadequate consideration or without consideration where the recipien .....

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..... he shares of the specified company through transfer for no or inadequate consideration. Hence, the provisions of section 56(2)(viia) of the Act shall not be applicable in cases of receipt of shares by the specified company or firm as a result of fresh issuance of shares as mentioned in para 2 above, by the specified company. 5. Hindi version to follow. (Vinay Sheel Gautam) Under Sec .....

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