Bonafide business transaction cannot be taxed U/s. 56(2)(vii)

ACIT Vs Shri Subhodh Menon (ITAT Mumbai)

Conclusion: Difference between alleged fair market value of share and the subscribed value of shares cannot be assessed as income u/s 56(2)(vii)(c) as the transaction of issue of shares was carried out to comply with a covenant in the loan agreement with the bank to fund the acquisition of the business by the subsidiary in USA, therefore, such a bonafide business transaction could not be taxed under section 56(2)(vii) especially when there was not even a whisper ab

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