section 56

Tax implications on Transactions Involving Shares of Indian Companies

Income Tax - In recent times, far reaching changes have been brought about in Income Tax law in relation to transactions involving transfer of shares of companies. These changes have increased the burden on the shoulders of tax payers as every time transactions involve issue or transfer of shares of unlisted companies, there are tax implications eithe...

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Section 56 – Taxation of gift received

Income Tax - As per income tax act gifts received are taxable in the hands of recipient under the head Income From Other Sources and there is no taxation for the donor. Here gift means any sum of money, Moveable property or immovable property which received without consideration or inadequate consideration....

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FAQ / Performa of gift deed, List of Relatives for Tax free Gift

Income Tax - Article contains FAQ on Gift, ,list of relatives from whom an individual can receive the gifts without any income tax liability and also giving below Performa of gift deed....

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S.56 pertaining to gifts, deemed gifts / under-valuations

Income Tax - It is the considered view of the Government that in the materialistic world in which we are living, gifts are not possible from non-relatives. In the past, frequently claims were successfully made  by individuals about receipt of  huge amounts as gifts from other individuals even though the donor and the donee were not related to each o...

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‘Corporate Gifts – Beware of Tax Implications’

Income Tax - Gifts! Corporate Gifts have over the years proved to be an effective marketing tool for organizations across products and services. Organizations understand the importance of building and maintaining long term relationships with clients, prospective clients, business associates, employees and other agencies involved in the growth of the ...

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Allow CMAs to do Valuation under Section 56 r.w. Rule 11UA

Income Tax - Income Tax Rule 11UA deals with Valuation of jewellery, archaeological collections and shares and securities for the purpose of Section 56. Erstwhile as per Clause (b) of Sub-Rule 2 of Rule 11UA earlier merchant banker and Chartered Accountant were allowed to do valuation of unquoted equity shares under Discounted Free Cash Flow method bu...

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ICAI gives representation to CBDT for not allowing CAs to do DCF certification

Income Tax - Notification No 23/2018, dated 20 May, 2018 amending Rule 11UA omitting reference to term accountant, thereby making Chartered Accountants ineligible to determine the FMV of unquoted equity shares as per the Discounted Free Cash Flow Method...

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Section 56: Increase exemption limit from Rs. 50,000 to Rs. 5 lakhs

Income Tax - The Finance Act, 2017 inserted a new clause (x) in sub-section (2) of section 56 so as to provide that receipt of the sum of money or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000 ...

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Section 56(2)(ix): Taxability of forfeited advance for transfer of a capital asset: Budget Suggestions

Income Tax - Clause (ix) is inserted in section 56(2) by Finance (No. 2) Act, 2014 to provide for taxability of any sum received as an advance or otherwise in the course of negotiations for transfer of capital asset. ...

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ICAI suggests inclusion of Relatives of HUF in Definition of term relative U/s. 56(2)(vii)

Income Tax - Under the existing provisions of section 56(2)(vii), any sum or property received by an individual or HUF for inadequate consideration or without consideration is deemed as income and is taxed under the head Income from other sources. ...

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Addition U/s. 68 rw section 56: Addition for share premium in excess of Fair Value

Sunrise Academy of Medical Specialities (India) (P.) Ltd Vs  ITO (Kerala High Court) - Sunrise Academy of Medical Specialities (India) (P.) Ltd Vs  ITO (Kerala High Court) (DB)  Any premium received by a Company on sale of shares, in excess of its face value; if the Company is not one in which the public has substantial interest, would be treated as income from other sources, as see...

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ITAT on Genuineness of Gift of Shares by A Company to other Group Company

Gagan Infraenergy Ltd. Vs DCIT (ITAT Delhi) - That the order passed by Assessing Officer ('AO') dated 30.12.2016 as upheld by the Commissioner of Income Tax (Appeals) ('CIT(A)') dated 29.12.2017 and the additions/disallowances made and upheld are illegal, bad in law and without jurisdiction....

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No addition for Gift from daughter if Assessee proves identity, genuineness & creditworthiness

Padmalatha Tama Vs Income-tax Officer (ITAT Hyderabad) - Briefly the facts of the case are, assessee who derives income from house property and income from other sources, filed her return of income for the AY 2010-11 on 27/07/2010 declaring an income of Rs. 17,75,810/-. Subsequently, the case was selected for scrutiny under CASS and accordingly notice u/s...

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Addition justified for huge gifts on failure to prove genuineness

Kamlesh Parwani Vs Income-Tax Officer (ITAT Mumbai) - The captioned appeal by assessee for Assessment Year [AY] 2005-06 contest the order of Ld. Commissioner of Income-Tax (Appeals)-18 [CIT(A)], Mumbai, Appeal No.CIT(A)-18/T-62/ITO 19(3) (2)/10-11 dated 14/01/2013 qua confirmation of certain addition on account of cash credit u/s 68 for Rs.4 Lacs....

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FMV of shares has to be determined on the basis of book values of underlying assets

Minda SM Technocast Pvt. Ltd Vs ACIT (ITAT Delhi) - Minda SM Technocast Pvt. Ltd Vs ACIT (ITAT Delhi) 1. In the present case, the assessee has acquired shares of TEPL at Rs.5 per shares. The shares were acquired by the assessee from three companies as discussed in the preceding paragraphs. The assessee claimed to have valued the shares of TEPL as per...

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CAs cannot do Valuation of unquoted equity shares under DCF method

Notification No. 23/2018-Income Tax - (24/05/2018) - Income Tax Rule 11UA deals with Valuation of jewellery, archaeological collections and shares and securities for the purpose of Section 56. As per Clause (b) of Sub-Rule 2 of Rule 11UA earlier merchant banker and Chartered Accountant were allowed to do valuation of unquoted equity shares under Dis...

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Sec. 56(2)(viib) not applicable to startups having paid up share capital upto Rs. 10 crore

Notification No. G.S.R. 364(E) - (11/04/2018) - pproval for the purposes of clause (viib) of sub-section (2) of section 56 of the Act -A Startup being a private limited company and in conformity with the definition as per definition stipulated at Para 1(a) shall be eligible to apply for approval for the purposes of clause (viib) of sub-section (2...

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No coercive recovery from Start ups for addition on Share Capital Valuation issue: CBDT

F.No. 173/14/2018-ITA.I - (06/02/2018) - It has been decided that in case of 'Start Up' companies which fall within the definition given in Notification of DIPP, Min. of Commerce & Industry, in G.S.R. 501(E) dated 23.05.2017, if additions have been made by the Assessing Officer under section 56(2)(viib) of the Act after modifying/rejecting...

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CBDT notifies rules to determine of Fair Market Value of unquoted shares

Notification No. 61/2017-Income Tax / G.S.R. 865(E) - (12/07/2017) - Determination of Fair Market Value for share other than quoted share. 11UAA. For the purposes of section 50CA, the fair market value of the share of a company other than a quoted share, shall be determined in the manner provided in sub-clause (b) or sub-clause(c),as the case may be, ...

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S.56 No Tax on Startup Shares issued about FMV: CBDT

Notification No. 45/2016-Income Tax - (14/06/2016) - Central Government, hereby notifies the 'classes of persons' for the purposes of section 56(2)(viib)(ii) as being the 'person' defined under sub-section (31) of section 2 of the said Act, being resident, who make any consideration exceeding the face value for issues of shares of a 'startup' company...

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Recent Posts in "section 56"

Addition U/s. 68 rw section 56: Addition for share premium in excess of Fair Value

Sunrise Academy of Medical Specialities (India) (P.) Ltd Vs  ITO (Kerala High Court)

Sunrise Academy of Medical Specialities (India) (P.) Ltd Vs  ITO (Kerala High Court) (DB)  Any premium received by a Company on sale of shares, in excess of its face value; if the Company is not one in which the public has substantial interest, would be treated as income from other sources, as seen from Section […]...

Read More

Tax implications on Transactions Involving Shares of Indian Companies

In recent times, far reaching changes have been brought about in Income Tax law in relation to transactions involving transfer of shares of companies. These changes have increased the burden on the shoulders of tax payers as every time transactions involve issue or transfer of shares of unlisted companies, there are tax implications eithe...

Read More
Posted Under: Income Tax |

Section 56 – Taxation of gift received

As per income tax act gifts received are taxable in the hands of recipient under the head Income From Other Sources and there is no taxation for the donor. Here gift means any sum of money, Moveable property or immovable property which received without consideration or inadequate consideration....

Read More
Posted Under: Income Tax |

FAQ / Performa of gift deed, List of Relatives for Tax free Gift

Article contains FAQ on Gift, ,list of relatives from whom an individual can receive the gifts without any income tax liability and also giving below Performa of gift deed....

Read More
Posted Under: Income Tax | ,

S.56 pertaining to gifts, deemed gifts / under-valuations

It is the considered view of the Government that in the materialistic world in which we are living, gifts are not possible from non-relatives. In the past, frequently claims were successfully made  by individuals about receipt of  huge amounts as gifts from other individuals even though the donor and the donee were not related to each o...

Read More
Posted Under: Income Tax | ,

‘Corporate Gifts – Beware of Tax Implications’

Gifts! Corporate Gifts have over the years proved to be an effective marketing tool for organizations across products and services. Organizations understand the importance of building and maintaining long term relationships with clients, prospective clients, business associates, employees and other agencies involved in the growth of the ...

Read More
Posted Under: Income Tax |

Taxability of Gifts received from Relatives & Non Relatives

If  an individual/Huf receives from any person or persons any gift , exceeding Rs. 50000 in any previous year, as per income tax laws, the aggregate amount shall be taxable as Income From Other Sources in the hands of individual or HUF U/s 56. The gift can be the following...

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Posted Under: Income Tax | ,

Allow CMAs to do Valuation under Section 56 r.w. Rule 11UA

Income Tax Rule 11UA deals with Valuation of jewellery, archaeological collections and shares and securities for the purpose of Section 56. Erstwhile as per Clause (b) of Sub-Rule 2 of Rule 11UA earlier merchant banker and Chartered Accountant were allowed to do valuation of unquoted equity shares under Discounted Free Cash Flow method bu...

Read More
Posted Under: Income Tax |

ITAT on Genuineness of Gift of Shares by A Company to other Group Company

Gagan Infraenergy Ltd. Vs DCIT (ITAT Delhi)

That the order passed by Assessing Officer ('AO') dated 30.12.2016 as upheld by the Commissioner of Income Tax (Appeals) ('CIT(A)') dated 29.12.2017 and the additions/disallowances made and upheld are illegal, bad in law and without jurisdiction....

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Taxability of Gift received by an individual or HUF with FAQs

Sum of money:-As per the provisions of the I-T Act, 1961 (the Act), any sum of money received by an individual or a Hindu undivided family in a particular financial year, without consideration, the aggregate value of which exceeds Rs 50,000 is taxable....

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Posted Under: Income Tax |

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