Section 56(2)(viia) not apply to shares held as stock-in-trade: ITAT Mumbai

Utility Supply Private Limited Vs DCIT (ITAT Mumbai)

Mumbai: In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai, has held that shares held by a company as “stock-in-trade” in the normal course of its business are not subject to addition under Section 56(2)(viia) of the Income Tax Act, 1961. The tribunal’s decision in the case of Utility Supply Private Limited Vs DCIT clarifies the scope of this anti-abuse provision, asserting it is not intended to tax regular business transactions.

The central question before the tribunal was whether

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