Non-utilization of share premium according to section 78(2) of Companies Act could not be taxed under Income Tax Act

ITO Vs New Era Advisors P. Ltd. (ITAT Mumbai) Conclusion: Even if amount received in form of huge share premium was not utilized for the purpose of  section 78(2) of the Companies Act, 1956, the same would not have any relevance for the purpose of Income Tax Act, 1961. Further, while the utilization of premium may be deemed to be reduction of capital, it did not imply that there was distribution of assets to the shareholders. The action of AO to apply section 2(22)(a) was therefore not upheld.  Held: Assessee company had collected huge premium in sum of Rs.10,66,23,000/- on allotment of shar...