section 56

Start-Up – A Growth Engine For Economy

Income Tax - Start-up India is a flagship initiative, launched by government in January 2016, within the ambit of the ‘Make in India’ programme. Start-up India was brought in with the intention to build a strong eco-system for promoting innovation, improve sustainable economic growth and to generate large scale employment opportunities....

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Open Letter to FM: Suspend Section 43CA & 56(x) to revive Sick Real Estate Companies

Income Tax - Real Estate Sector needs a bigger dose of corrective measures and concessions to bring out this sector from the red. One of the Demands of the Real Estate Sector is to Suspend Section 43CA & Section 56 (x) of the Income Tax Act....

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Vicious Circle of Setting up of Over-Ambitious Revenue Collection Targets

Income Tax - The Vicious Circle of Setting up of Over-Ambitious Revenue Collection Targets – Revenue Authorities Over-Reaching Taxpayers- Withholding of Refunds!! With a view to provide the much needed stimulus and push to the falling GDP growth rate and the currently prevailing slow-down in economy, the Hon’ble Finance Minister (FM) Smt. Nirmala ...

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Time to Revisit Section 50C/43CA/56(2) – Adoption of Circle Rates

Income Tax - Time to Revisit Section 50C/43CA/56(2) of Income Tax Act concerning Adoption of Circle Rates for Computation of Capital Gain/Business Profits/Income from Other Sources on Land & Building!! The Finance Act 2002 has introduced a new section 50C with effect from 1-4-2003, for the purpose of computation of capital gains in real estate tra...

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Section 56 on Fresh /Bonus/Right Issue & Buy Back of Shares

Income Tax - Applicability of Section 56(2)(viia) & 56(2)(x) of the Income Tax Act, 1961 on Fresh /Bonus/Right Issue & Buy Back of Shares: An Undying Conundrum!! The provisions of section 56(2)(viia) of the Income Tax Act were inserted w.e.f. the Finance Act 2010, and read as under: Section 56(2) : “In particular, and without prejudice to th...

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No scrutiny of Start-ups related to valuations of share premiums 

Income Tax - Start-ups and their investors filing requisite declarations not to be subjected to any scrutiny regarding valuations of share premiums  E-verification mechanism proposed for establishing identity of the investor and source of his funds TV programme proposed exclusively for Start-ups within the DD bouquet of channels Government to launch ...

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CBDT Circular on anti-abuse provisions in cases of receipt of shares

Income Tax - Central Board of Direct Taxes had issued Circular 10/2018 dated 31.12.2018 to clarify that provisions of section 56(2)(viia) of the Income-tax Act, 1961 being anti-abuse provisions shall not be applicable in cases of receipt of shares by the specified company or firm as result of fresh issuance of shares including by way of bonus shares, ...

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6 Suggestions for Amendments in Income Tax Act by BCAS

Income Tax - Bombay Chartered Accountants' Society has made a Representation on 'Suggestions for Amendments in the Income Tax Act', on 24th May, 2019, to the Joint Secretary TPL, Central Board of Direct Taxes, Ministry of Finance, Government of India....

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DIPP Clarification on IT Notice to Angel Investors/Start-ups

Income Tax - The Department of Industrial Policy & Promotion(DIPP) has taken notice of the news reports regarding issue of notices by Income Tax authorities to Angel Investors/Start-ups. DIPP in consultation with the Department of Revenue (DoR) has put in place a mechanism since April 2018 to grant exemption from the provisions of Section 56(2)(vi...

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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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Section 56(2)(vii)(b) applies to rural agricultural land acquired below stamp value

ITO Vs Shri Trilok Chand Sain (ITAT Jaipur) - The limited point of dispute is the nature of immovable property which has been purchased by the assessee. The assessee’s contention is that which he has purchased are three plots of agricultural land and the same doesn’t fall in the definition of capital asset as per the provisions of Section 2...

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Share valuation report without scientific basis can be rejected

M/s. Innoviti Payment Solutions Pvt. Ltd. Vs ITO (ITAT Banglore) - M/s. Innoviti Payment Solutions Pvt. Ltd. Vs ITO (ITAT Banglore) (1) The AO can scrutinize the valuation report and the if the AO is not satisfied with the explanation of the assessee, he has to record the reasons and basis for not accepting the valuation report submitted by the assessee and only th...

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Gift by individual to HUF is exempt same as a gift from HUF to its member

Pankil Garg Vs  PCIT (ITAT Chandigarh) - Amount received by assessee from ‘HUF’, being its member, was a capital receipt in his hands and was not exigible to income tax as in case of individual, the HUF has not been included in the definition of relative in explanation to section 56(2) (vii) as it was not so required because in case of...

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FMV for section 56(2)(viib) determined by assessee accountant as per DCF method prescribed u/r 11 UA(2) was proper

Cinestaan Entertainment P. Ltd. Vs ITO (ITAT Delhi) - Where there was an option under Rule 11UA(2) to determine the FMV by either the ‘DCF Method’ or the 'NAV Method', AO had no jurisdiction to discard the valuation report of the CA mainly on the ground that valuation of equity shares carried out by assessee was based on projection of revenue which...

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Difference between purchase and market price of shares quoted on BSE/NSE is deemed benefit taxable u/s 56(2)(vii)

Radhika Roy Vs DCIT (ITAT Delhi) - Enhancement of assessee's income on account of difference between the purchase price of the shares of NDTV limited at Rs 4 per share and the market price of those shares quoted on recognized stock exchange at Rs. 140 per share was a benefit taxable u/s 56 (2)( vii)  as assessee could not justify th...

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Consolidated circular for Income Tax assessment of Startups

Circular No. 22/2019 - (30/08/2019) - In case of Startup companies recognized by Department for Promotion of Industry and Internal Trade (DPIIT) which have filed Form No. 2 and whose cases are under limited scrutiny on the single issue of applicability of section 56(2)(viib) of the Income-tax Act, 1961 (the Act),the contention of the as...

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CBDT simplifies process of assessment in respect of Startups

NA - (10/08/2019) - In case of Startup Companies recognized by DPIIT which have filed Form No. 2 and whose cases are under limited scrutiny on the single issue of applicability of section 56(2)(viib),the contention of the assessee will be summarily accepted....

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Angel Taxation | Assessment Procedure of startup Companies | Section 56

Circular No 16/2019 - (07/08/2019) - Following procedure is laid down with regard to the assessment of such startup entities involving the issue of section 56(2)(viib). (i) Where the Startup Company has been recognised by the DPIIT but the case is selected under "limited scrutiny" on the single issue of applicability of section 56 (2)(...

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No Angel tax on issuance of shares up to Rs. 25 crore

Notification No. G.S.R. 127(E) - (19/02/2019) - A Start-ups will be eligible for exemption under Section 56 (2) (viib) of Income Tax Act, if it is a private limited company recognized by DPIIT and is not investing in any of the following assets: i. building or land appurtenant thereto, being a residential house, other than that used by the Start-...

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Angel Tax Relief U/s 56(2)(viib)- DIPP Notification

G.S.R. 34(E) - (16/01/2019) - A Startup which is recognised by DIPP under para 2(iii) (a) shall be eligible to apply for approval for the purposes of clause (viib) of sub-section (2) to section 56 of the Act for the shares already issued or proposed to be issued if the following conditions are fulfilled‑...

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Recent Posts in "section 56"

Start-Up – A Growth Engine For Economy

Start-up India is a flagship initiative, launched by government in January 2016, within the ambit of the ‘Make in India’ programme. Start-up India was brought in with the intention to build a strong eco-system for promoting innovation, improve sustainable economic growth and to generate large scale employment opportunities....

Read More
Posted Under: Income Tax |

Section 56(2)(vii)(b) applies to rural agricultural land acquired below stamp value

ITO Vs Shri Trilok Chand Sain (ITAT Jaipur)

The limited point of dispute is the nature of immovable property which has been purchased by the assessee. The assessee’s contention is that which he has purchased are three plots of agricultural land and the same doesn’t fall in the definition of capital asset as per the provisions of Section 2(14) of the Act and provisions of sectio...

Read More

Open Letter to FM: Suspend Section 43CA & 56(x) to revive Sick Real Estate Companies

Real Estate Sector needs a bigger dose of corrective measures and concessions to bring out this sector from the red. One of the Demands of the Real Estate Sector is to Suspend Section 43CA & Section 56 (x) of the Income Tax Act....

Read More
Posted Under: Income Tax | ,

Share valuation report without scientific basis can be rejected

M/s. Innoviti Payment Solutions Pvt. Ltd. Vs ITO (ITAT Banglore)

M/s. Innoviti Payment Solutions Pvt. Ltd. Vs ITO (ITAT Banglore) (1) The AO can scrutinize the valuation report and the if the AO is not satisfied with the explanation of the assessee, he has to record the reasons and basis for not accepting the valuation report submitted by the assessee and only thereafter, he can […]...

Read More

Consolidated circular for Income Tax assessment of Startups

Circular No. 22/2019 (30/08/2019)

In case of Startup companies recognized by Department for Promotion of Industry and Internal Trade (DPIIT) which have filed Form No. 2 and whose cases are under limited scrutiny on the single issue of applicability of section 56(2)(viib) of the Income-tax Act, 1961 (the Act),the contention of the assessee will be summarily accepted....

Read More

Vicious Circle of Setting up of Over-Ambitious Revenue Collection Targets

The Vicious Circle of Setting up of Over-Ambitious Revenue Collection Targets – Revenue Authorities Over-Reaching Taxpayers- Withholding of Refunds!! With a view to provide the much needed stimulus and push to the falling GDP growth rate and the currently prevailing slow-down in economy, the Hon’ble Finance Minister (FM) Smt. Nirmala ...

Read More
Posted Under: Income Tax |

Gift by individual to HUF is exempt same as a gift from HUF to its member

Pankil Garg Vs  PCIT (ITAT Chandigarh)

Amount received by assessee from ‘HUF’, being its member, was a capital receipt in his hands and was not exigible to income tax as in case of individual, the HUF has not been included in the definition of relative in explanation to section 56(2) (vii) as it was not so required because in case of HUF,...

Read More

CBDT simplifies process of assessment in respect of Startups

NA (10/08/2019)

In case of Startup Companies recognized by DPIIT which have filed Form No. 2 and whose cases are under limited scrutiny on the single issue of applicability of section 56(2)(viib),the contention of the assessee will be summarily accepted....

Read More

Time to Revisit Section 50C/43CA/56(2) – Adoption of Circle Rates

Time to Revisit Section 50C/43CA/56(2) of Income Tax Act concerning Adoption of Circle Rates for Computation of Capital Gain/Business Profits/Income from Other Sources on Land & Building!! The Finance Act 2002 has introduced a new section 50C with effect from 1-4-2003, for the purpose of computation of capital gains in real estate tra...

Read More
Posted Under: Income Tax |

Angel Taxation | Assessment Procedure of startup Companies | Section 56

Circular No 16/2019 (07/08/2019)

Following procedure is laid down with regard to the assessment of such startup entities involving the issue of section 56(2)(viib). (i) Where the Startup Company has been recognised by the DPIIT but the case is selected under "limited scrutiny" on the single issue of applicability of section 56 (2)(viib), no verification on such issues wi...

Read More

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