DCIT 1(3)(2), MUMBAI VS VARSITY EDUCATION MANAGEMENT
I.T.A. NO. 6991/MUM/2016
24-10-2019
I.T.A. NO. 6991/MUM/2016
24-10-2019
S. 68 Bogus share premium: The AO cannot assess the share premium as income on
the ground that it is "excessive". The share premium worked out in the Valuation
Certificate is the minimum amount that can be collected by the assessee under
RBI regulations. There is no bar on collecting higher amount as share premium.
There are several factors that are taken into consideration while issuing the
equity shares to shareholders/investors, such as Venture capital funds and
Private Equity funds. The premium is determined between the parties on the basis
of commercial considerations and cannot be questioned by the tax authorities.
The AO is not entitled to sit on the arm chair of a businessman and regulate the
manner of conducting business (All judgements considered).
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