Section 56(2)(viib) Inapplicable for Share Allotment at Premium by Subsidiary to Holding Company

ITO Vs K V Global Pvt. Ltd. (ITAT Delhi)

In a significant ruling by the Income Tax Appellate Tribunal (ITAT) Delhi, dated 13th December 2023, the case of ITO Vs K V Global Pvt. Ltd. highlighted the applicability of Section 56(2)(viib) of the Income Tax Act, 1961, concerning share premium transactions between subsidiary and holding companies. This decision provides clarity on the taxation aspect of share premiums recorded by companies, especially in cases where shares are issued at a premium to their holding companies.