CBDT Withdraws Circular No. 10/2018 dated 31.12.2018 on 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. It is learnt that Same is been withdrawn considering the Negative Impact it may have on National Herald case involving Mrs Sonia Gandhi and Shri Rahul Gandhi. Now question is what prompted CBDT to issue circular on such issue and what made them withdrawn this. It seems to be Game of Politics in CBDT. Text of Withdrawal Circular No. 02/2019 is as follows:-
Circular No. 02/2019-Income Tax
F.No. 173/616/2018-ITA-I
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(ITA-1 Division)
******
Ncw Delhi, the 04 January, 2019
Sub: Withdrawal of Circular No. 10/2018 dated 31.12.2018 on 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.
Reference is invited to the Circular No. 10/2018 dated 31.12.2018 on the captioned subject.
2. It has been brought to the notice of the Board that the matter relating to interpretation of the term “receives” used in section 56(2)(viia) of the Income-tax Act, 1961 (the Act) is sub-judice in certain higher judicial forums. Further, representations have been received from stakeholders seeking clarification on other similar provisions in section 56 of the Act.
3. Accordingly, the matter has been reconsidered by the Board. Given the fact that the matter relating to interpretation of the term ‘receives’ used in section 56(2)(viia) of the Act is pending before judicial forums and stakeholders have sought clarifications on similar provisions in section 56 of the Act, the Board is of the view that the matter is required to be examined afresh so that a comprehensive circular on the matter can be issued,
4. In view of the above, the Circular No. 10/2018 dated 31st December, 2018 issued from file No. 173/616/2018-1TA-I is hereby withdrawn and the said circular shall be considered to have been never issued.
5. A fresh comprehensive circular on the subject shall be issued in due course.
(Rajarajeswari R)
Under Secretary to the Government of India
Copy to:-
i. PS to FM/OSD to FM/PS to MoS(F)/OSD to MqS(F)
ii. PS to Secretary (Revenue)
iii. Chairman, cunT & All Members. CBDT
iv. All Pr. CCsIT/ Pr. DsGIT
v. All Joint Secretanes/CslT. CBDT
vi. CIT (M&TP), Official Spokesperson of CBDT
(Rajarajeswari R)
Under Secretary to the Government of India
