Section 56 2 vii of income tax act 1961 pdf

Withdrawal of circular relating to applicability of section 562viia to fresh issuance of shares by a private company 25 april 2018january 20197 section 562viia of the incometax act, 1961 the act provides for taxation of income where a private company1 or a firm receives shares of a private company from a person for no or inadequate. Legal effect of amendment to section 562 of income tax act. This act shall apply to tanzania mainland as well as tanzania zanzibar. Analysis of provisions of section 562x of incometax act. Section 562vii shall not be attracted where an individualhuf receives any money, immovable property or other property. The applicability of corresponding old deemed gift clauses being section 56 2 vii and 56 2 viia has been. Transactions related to purchase of property by company, partnership firm, llp, trust, aop, ajp are out of the purview of this section. Withdrawal of circular relating to applicability of section 56 2 viia to fresh issuance of shares by a private company 25 april 2018january 20197 section 56 2 viia of the income tax act, 1961 the act provides for taxation of income where a private company1 or a firm receives shares of a private company from a person for no or inadequate. Cbdt clarifies its position on the applicability of section. Withdrawal of circular relating to applicability of section. Section 2 24xv of the act, defining income, includes therein any sum of money or value of property referred to in section 56 2 vii viia of the act.

Section 56 of income tax act 19612017 provides for income from other sources. Therefore, the income which cannot be brought to tax under section 56 2 of the act, under specific head, it cannot be taxed even under section 56 1 of the act. Finance act 2017 has inserted a new clause x in section 56 2 w. Dec 20, 2018 white paper on section 56 2 viib and section 68 and its impact on startups in india abstract the purpose of this paper is to provide a deeper understanding of sections 56 2 viib and 68 of the income tax act, 1961, the context behind the insertion of these sections, implications of the same on companies raising capital from investors and. May 29, 2018 discuss the taxability or otherwise of the following in the hands of the recipient under section 562vii the incometax act, 1961 i akhil huf received rs. Income tax act, 1961 it act governing provision as per provision of section 562 of it act which states in particular, and without prejudice to the generality of the provisions of subsection 1, the following incomes, shall be chargeable. Jun 14, 2015 gift is taxable in the hands of bharti under the head income from other sources under section 56 2 vii. Further, the officer also accepted the fact that since these were receipts from dubeys father and sisterinlaw, they qualified as relatives for the purpose of section 56 of the incometax act, 1961. The union budget 2012 has introduced a new clause in the income tax act, 1961, according to which, with effect from april 1, 20, that portion of consideration received for the issue of shares of a public unlisted. Section 56 2 of the act, deals with specific income which is not income as per section 2 24 of the act but specifically brought under the definition of income by the legislature. Recently1, the jaipur bench of the incometax appellate tribunal tribunal held that the intention of clause vii of section 562 of the incometax act, 1961 act is not to tax the transactions entered in the normal course of business or trade, where the profits are taxable under the specific income head. This article provides list of relatives covered section 56 2 vii of the income tax act, 1961. However the definition of the term relative which is given in the 1 st explanation to the proviso to section 56 2 vii is very wide in its own. In this act, unless the context requires otherwise act no.

Hence whole stamp duty value fair market value is taxable in the hand of bharti. Section 562vii of the income tax act, 1961 deals with transfer of an immovable property being received by an assessee as capital assets. Income tax act 1961 complete act citation 530 bare act. Discuss the taxability or otherwise of the following in the hands of the recipient under section 562vii the incometax act, 1961 i akhil huf received rs. Facts the taxpayer company, lufthansa cargo india acquired four. Comptroller means the comptroller of income tax appointed under section 31 and includes, for all purposes of this act except the exercise of the powers conferred upon the comptroller by sections 34f9, 37ie7, 37j5, 671a, 95, 96, 96a and 101, a deputy comptroller or an assistant comptroller so appointed. Section 562viib of the incometax act is not applicable. Section 224xv of the act, defining income, includes therein any sum of money or value of property referred to in section 562viiviia of the act.

Because stamp duty value fair market value of the property is in excess of rs. Section 562viib was introduced in the income tax act, 1961 ita vide the finance act, 2012, seeking to tax any excess premium received by a closely held company upon the issue of shares. Section 56 2 vii of the income tax act, 1961 reads as any even if amount exceeding rs. Section 562 of the act, deals with specific income which is not income as per section 224 of the act but specifically brought under the definition of income by the legislature. Angel tax white paper on section 56 2viib and section 68. As per 56 2 vii, the following received by an individul or huf was considered as income. All air prevention and control of pollution act, 1981 apprentices act, 1961 arbitration and conciliation act, 1996 banking cash transaction tax black money undisclosed foreign income and assets and imposition of tax act, 2015 central boards of revenue act, 1963 charitable and religious trusts act, 1920 charitable endowments act, 1890. For the purposes of this clause 66and clause 6b, a fees for technical services shall have the same meaning as in explanation 2 to clause vii of subsection 1 of. Analysis of section 562vii section 562viia section 56.

In the hands of bharti donee gift is taxable in the hands of bharti under the head income from other sources under section 56 2 vii. Section 56 2 lists incomes chargeable to income tax under the head income from other sources. Gifts from relatives are always taxfree the economic times. S 562viib introduced by finance act 2012 w e f 01 04 20 applicable to closely held 2. Section 562viib should apply at the time of issue of shares finding of cita not disturbed the ao had made addition to income under section 562viib of the act in relation to the sam received i. As per section 562vii if any gift received from relative which are covered under following list will be exempt in the hands of receiver. Such excess premium is deemed to be the income of the company and shall be taxed under section 562viib.

What is section 562 7b in the income tax act of 1961. This section has made all the hue and cry among the real estate dealers. Section 56 income from other sources incometax act, 1961 x x x x extracts x x x x notification no. Section 56 2 vii shall not be attracted where an individualhuf receives any money, immovable property or other property. Section 562vii of the income tax act, 1961 vii where an individual or a hindu undivided family receives, in any previous year, from any. List of relatives covered under section 562 of income tax. Gifts under section 562vii of the income tax act, 1961 for gifts received on or after 01.

Allotment of bonus shares cannot be considered as received. The cbdt, however, came out with the drafted amended rule11ua which were at variance with the erstwhile rule11ua. The union budget 2012 has introduced a new clause in the income tax act, 1961, according to which, with effect from april 1, 20, that portion of consideration received for the issue of shares of a public unlisted company or private company to an indian resident that is. Facts the taxpayer company, lufthansa cargo india acquired four old boeing aircrafts from a nonresident company. List of relatives covered under section 562 of income. Nilesh mody partner section 56 2 viib was introduced in the income tax act, 1961 ita vide the finance act, 2012, seeking to tax any excess premium received by a closely held company upon the issue of shares. Earlier, only gifts received in the sum of money was chargeable under income tax act. Subordination and control of income tax authorities. Bombay chartered accountants society bcas knowledge resource update title issues and controversies under section 56 2 vii, 56 2 viia, viib and section 562 x of the incometax,1961 features section 56 of the incometax act, 1961 has grown from strengthtostrength and its coverage has also been widened over the past few years. Gifts under section 56 2 vii of the income tax act, 1961 for gifts received on or after 01. Cbdt clarifies its position on the applicability of section 562viia of the incometax act to fresh issuance of shares by a company 2225 april 2018january 2019 background section 562viia of the incometax act, 1961 the act provides for taxation of income where a private company1 or a firm receives shares of a private. This document is an unofficial consolidation of the eighth schedule to the income tax act, 58 of 1962, introduced by the taxation laws amendment act, 5 of 2001, the amendments effected by the revenue laws amendment act, 19 of 2001, the amendments effected by second revenue laws amendment act, 60 of 2001, the. Section 56 income from other sources incometax act, 1961.

Income tax act 1961 section 56 citation 23220 bare act. The act states that gifts received from relatives are exempt from income tax. Section 56 2 vii of the income tax act, 1961 deals with transfer of an immovable property being received by an assessee as capital assets. Section 56 2 viib was introduced in the income tax act, 1961 ita vide the finance act, 2012, seeking to tax any excess premium received by a closely held company upon the issue of shares.

Section 562vii applicable to property in the nature of. Income tax manual part 1 national board of revenue. Section 56 of income tax act income from other sources section 56. Rebate of incometax in case of individuals of sixtyfive years or above omitted. Income tax shall not be chargeable at normal rate for fresh issue of shares for closely held companies. Section 43ca of the income tax act, 1961 has been introduced in the income tax act, 1961 by the finance act 20 w. The cbdt, however, came out with the drafted amended rule11ua which were. Though the definition of property under section 562 x remains similar to that of section 562vii method of valuation shall be governed by rule 11u 11ua income charged to tax under section 562x shall form part of the cost at the time.

As per section 56 2 vii if any gift received from relative which are covered under following list will be exempt in the hands of receiver. The act states that gifts received from relatives are. Section 56 of incometax act 19612017 income from other. White paper on section 562viib and section 68 and its impact on startups in india abstract the purpose of this paper is to provide a deeper understanding of sections 562viib and 68 of the income tax act, 1961, the context behind the insertion of these sections, implications of the same on companies raising capital from investors and. There is no capital gain tax in the hands of lucky because gift transfer is exempted us 47 of the income tax act and other reason is that there is no sale price exist. Such excess premium is deemed to be the income of the company and shall be taxed under section 56 2 viib. May 17, 20 section 56 2 lists incomes chargeable to income tax under the head income from other sources. New clause inserted on section 562x and section 50ca. Though the definition of property under section 56 2 x remains similar to that of section 56 2 vii method of valuation shall be governed by rule 11u 11ua income charged to tax under section 56 2 x shall form part of the cost at the time of transfer of assets acquired under section 494.

This article provides list of relatives covered section 562vii of the income tax act,1961. Section 562vii applicable to property in the nature. Apr 25, 2019 clause v was inserted vide finance no. Oct 08, 2018 further, the officer also accepted the fact that since these were receipts from dubeys father and sisterinlaw, they qualified as relatives for the purpose of section 56 of the incometax act, 1961. Therefore, the income which cannot be brought to tax under section 562 of the act, under specific head, it cannot be taxed even under section 561 of the act. Section 56 of income tax act income from other sources. Gift is taxable in the hands of bharti under the head income from other sources under section 56 2 vii. During the assessment proceedings, the assessing officer. As per 562vii, the following received by an individul or huf was considered as income. Finance act, 2012 inserts clause viib, with effect from 1420 assessment year 2014 to include share premium received by a company in excess of its fair market value, as its income chargeable under the head income from other.