Home Income Tax Taxation of value of shares received by a firm or a company without consideration or for inadequate consideration-Section56(2)(viia)

Taxation of value of shares received by a firm or a company without consideration or for inadequate consideration-Section56(2)(viia)

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Value of shares received by a firm or a company without consideration or for inadequate consideration-Section56(2)(viia)

Where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010, any property, being shares of a company not being a company in which the public are substantially interested,—

(i) without consideration, the aggregate fair market value of which exceeds Rs. 50,000, the whole of the aggregate fair market value of such property;

(ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding Rs. 50,000, the aggregate fair market value of such property as exceeds such consideration;

shall be chargeable to income-tax under the head “Income from other sources”.

This clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47.(Proviso)

Fair market value” of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed;

E Prescribed method is Book Value method and Discounted Free Cash Flow method under Rule 11UA.

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