Case Law Details
KBC India Pvt. Ltd. Vs ITO (ITAT Delhi)
In a recent case between KBC India Pvt. Ltd. and the Income Tax Officer (ITO), heard by the Income Tax Appellate Tribunal (ITAT) Delhi, an appeal was made against an order pertaining to the assessment year 2016-17. The crux of the dispute lay in the addition of Rs. 41,70,000/- under section 56(2)(viib) of the Income-tax Act, 1961. The contention revolved around the valuation of shares allotted by the assessee to its holding company at a premium, and whether such premium attracted tax liability under the said provision.
Background
KBC India Pvt. Ltd., a resident corporate entity, filed its return of income declaring nil income for the relevant assessment year. During the assessment proceedings, it came to light that the company had allotted 10,000 equity shares to its holding company, M/s. Puran Associates Pvt. Ltd., at a premium of Rs. 1,400/- per share. The Assessing Officer questioned the justification for such a premium and sought clarification from the assessee regarding the fair market value (FMV) of the shares.
Assessment and Dispute
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Author Bio
sir in case of tehlka co share income tax did not objected when share on loss making co were sold to some business men at high premium.