Capital v. Revenue: Premium paid on buyback of shares

 CA Aishwaryaa V In a recent ruling that will have a bearing on the buyback activities, the Bombay High Court held that the premium paid for buyback of shares shall be tax deductible as business expenditure. (CIT v. Chemosyn Ltd). Companies resort to buyback of shares for a variety of reasons. Lack of investment opportunities in their core business, companies that are cash-rich, provision of exit route to shareholders, exercising put/call options under investment agreements. In this instant case, the assessee was directed by the Company Law Board (‘CLB’) to buy back the shares, to facili...