section 56

Contradiction between valuation under section 56(2)(viib) vis-à-vis 56(2)(x)(c)

Income Tax - Section 56(2)(viib) requires a Company (issuer), not being a company in which the public are substantially interested, to issue shares at Fair Market Value (FMV). Any consideration received by such issuing Company in excess of the FMV, to the extent it exceeds the face value of such shall be liable to tax. For the purpose […]...

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Method To Calculate FMV of Unquoted Shares

Income Tax - The fair market value of the shares= (i) as may be determined in accordance with such method as may be prescribed, or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares...

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Tax Treatment of Gifts Received By an Individual or HUF

Income Tax - A very common and frequent question running in the mind of taxpayers is the tax ability of gifts. In this part, an effort has been made to discuss the various provisions relating to taxability of gift received by an individual or a Hindu Undivided Family (HUF) under Income Tax Act. 1. Monetary Gifts: If the […]...

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Increase in safe harbour limit of 5% u/s 43CA, 50C & 56 to 10%

Income Tax - Budget 2020- Increase in safe harbour limit of 5% u/s 43CA, 50C and 56 of the Income Tax Act to 10% Section 43CA of the Act, inter alia, provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the […]...

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Dual taxation on transfer of immovable property – Sections 50C & 56(2)(x)(b)(B)

Income Tax - This article is a brief attempt to analyse two different provisions having similar impact on two different but connected assessees who amongst them have a relationship of buyer and seller of immovable property. The buyer gets taxed under the head Income from Other Sources while the seller is taxed under the head Capital Gains....

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Cabinet approves Taxation Laws (Amendment) Bill, 2019

Income Tax - In order to attract fresh investment in manufacturing and provide boost to 'Make-in India' initiative of the Government, another provision was inserted to the IT Act, to provide that a domestic manufacturing company set up on or after 1st October, 2019 and which commences manufacturing by 31st March, 2023, may opt to pay tax at 15% plus s...

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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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Section 56(2)(vii)(b) not applicable to Property Purchased before 01.04.2014

Bajrang Lal Naredi Vs ITO (ITAT Ranchi) - Bajrang Lal Naredi Vs ITO (ITAT Ranchi) In the instant appeal, the applicability of Section 56(2)(vii)(b) of the Act as amended by Finance Act, 2013 and applicable to AY 2014-15 in question. On a perusal of pre-amended provisions of Section 56(2)(vii)(b) of the Act, we gather that where an individua...

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Section 56(2)(viib) intends to tax unaccounted money received in garb of share premium

Clearview Healthcare P. Ltd Vs ITO (ITAT Delhi) - Clearview Healthcare P. Ltd Vs ITO (ITAT Delhi) There are two limbs in Section 56(2)(viib) of the Act. As per explanation to Section 56(2)(viib) of the Act, the first limb is valuation to be made as per the prescribed method. In fact, the method for valuation of shares is prescribed under Rule 11UA ...

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Section 56(2)(viia) not applies to a foreign company prior to 1.4.2019

Keva Industries Pvt. Ltd C/O. Vs ITO (ITAT Mumbai) - Keva Industries Pvt. Ltd Vs ITO (ITAT Mumbai) We find that there is no dispute that the assessee company had acquired the shares of a foreign company from its directors. We also find the provisions of section 56(2)(viia) of the Act refers to transaction of acquisition of any property being shares of...

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No addition if margin between value  given by assessee & Departmental Valuer was less than 10%

Geetika Sachdev Vs ITO (ITAT Delhi) - As margin between the value as given by the assessee and the Departmental Valuer was less than 10 percent and the difference is liable to be ignored and the addition made by the lower authorities on this count cannot be sustained...

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Section 56(2)(viia) not applies on acquisition of shares of a foreign company as per rule 11U(b)(ii) prior to 01.04.2019

M/s. Keva Industries Pvt. Ltd Vs ITO (ITAT Mumbai) - Provisions of section 56(2)(viia) was not applicable on acquisition of shares of a foreign company from its directors  because as per rule 11U(b)(ii) (prior to 01.04.2019) which defines "balance sheet‟ was not applicable to a foreign company and the amendment to Rule 11U with effect from 1.4.19 w...

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CBDT revises definition of unauthorised colonies of NCT of Delhi

Notification No. 12/2020-Income Tax [G.S.R. 124(E)] - (17/02/2020) - CBDT has vide Notification No. 12/2020-Income Tax  revises definition of unauthorised colonies of NCT of Delhi for rule 11UAC read with Section Section 56(2)(x). Earlier CBDT has provided vide Notification No. 96/2019-Income Tax dated 11th November, 2019 that Section 56(2)(x)  not applies to speci...

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CBDT notifies more modes of e-payments; 6DD limit reduced to ₹ 10000

Notification No. 08/2020-Income-Tax [G.S.R. 56(E)] - (29/01/2020) - Notification No. 8/2020-Income-Tax- CBDT has notified Other electronic modes by inserting New Income TAx Rule 6ABBA. It also amended marginal heading of rule 6DD and in rule 6DD for the words ‘account payee bank draft, exceeds twenty thousand rupees’, the words, figures and letters ̵...

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Section 56(2)(x) CBDT grants exemption to resident of unauthorised colony

Notification No. 96/2019-Income Tax [G.S.R. 836(E)] - (11/11/2019) - Unauthorised colony means a colony or development comprising of a contiguous area, where no permission has been obtained for approval of layout plan or building plans and has been identified for regularisation of such colony...

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Consolidated circular for Income Tax assessment of Startups

Circular No. 22/2019-Income Tax - (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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Recent Posts in "section 56"

Contradiction between valuation under section 56(2)(viib) vis-à-vis 56(2)(x)(c)

Section 56(2)(viib) requires a Company (issuer), not being a company in which the public are substantially interested, to issue shares at Fair Market Value (FMV). Any consideration received by such issuing Company in excess of the FMV, to the extent it exceeds the face value of such shall be liable to tax. For the purpose […]...

Read More
Posted Under: Income Tax |

Method To Calculate FMV of Unquoted Shares

The fair market value of the shares= (i) as may be determined in accordance with such method as may be prescribed, or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares...

Read More
Posted Under: Income Tax |

Tax Treatment of Gifts Received By an Individual or HUF

A very common and frequent question running in the mind of taxpayers is the tax ability of gifts. In this part, an effort has been made to discuss the various provisions relating to taxability of gift received by an individual or a Hindu Undivided Family (HUF) under Income Tax Act. 1. Monetary Gifts: If the […]...

Read More
Posted Under: Income Tax |

CBDT revises definition of unauthorised colonies of NCT of Delhi

Notification No. 12/2020-Income Tax [G.S.R. 124(E)] (17/02/2020)

CBDT has vide Notification No. 12/2020-Income Tax  revises definition of unauthorised colonies of NCT of Delhi for rule 11UAC read with Section Section 56(2)(x). Earlier CBDT has provided vide Notification No. 96/2019-Income Tax dated 11th November, 2019 that Section 56(2)(x)  not applies to specific immovable property transactions of s...

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Increase in safe harbour limit of 5% u/s 43CA, 50C & 56 to 10%

Budget 2020- Increase in safe harbour limit of 5% u/s 43CA, 50C and 56 of the Income Tax Act to 10% Section 43CA of the Act, inter alia, provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the […]...

Read More
Posted Under: Income Tax |

Dual taxation on transfer of immovable property – Sections 50C & 56(2)(x)(b)(B)

This article is a brief attempt to analyse two different provisions having similar impact on two different but connected assessees who amongst them have a relationship of buyer and seller of immovable property. The buyer gets taxed under the head Income from Other Sources while the seller is taxed under the head Capital Gains....

Read More
Posted Under: Income Tax |

CBDT notifies more modes of e-payments; 6DD limit reduced to ₹ 10000

Notification No. 08/2020-Income-Tax [G.S.R. 56(E)] (29/01/2020)

Notification No. 8/2020-Income-Tax- CBDT has notified Other electronic modes by inserting New Income TAx Rule 6ABBA. It also amended marginal heading of rule 6DD and in rule 6DD for the words ‘account payee bank draft, exceeds twenty thousand rupees’, the words, figures and letters ‘account payee bank draft or use of ele...

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Section 56(2)(vii)(b) not applicable to Property Purchased before 01.04.2014

Bajrang Lal Naredi Vs ITO (ITAT Ranchi)

Bajrang Lal Naredi Vs ITO (ITAT Ranchi) In the instant appeal, the applicability of Section 56(2)(vii)(b) of the Act as amended by Finance Act, 2013 and applicable to AY 2014-15 in question. On a perusal of pre-amended provisions of Section 56(2)(vii)(b) of the Act, we gather that where an individual or HUF receives from any […]...

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HRA: How to compute exemption

What is House Rent Allowance? Employees generally receive a house rent allowance (HRA) from their employers. This is a part of the salary package, in accordance with the terms and conditions of employment. HRA is given to meet the cost of a rented house taken by the employee for his stay....

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Posted Under: Income Tax |

5 Important points related to Charitable / religious trusts

Finance Act’2017 had made some major changes relating to Charitable and religious trusts. In this Article we have discussed five major amendments which are affecting Charitable and religious trusts....

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Posted Under: Income Tax |

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