Clarification regarding nature of share Buy-back transactions under Income-tax Act, 1961

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..... x Act, 1961-regd. As per provisions of Section 46A of the Income-tax Act, 1961 ('Act'), applicable with effect from 01.04.2000, any consideration received by a shareholder or a holder of other specified securities from any company on purchase of its own shares/other specified securities shall be, subject to provisions contained in section 48, deemed to be capital gains. Further, sub-claus .....

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..... 013 are being interpreted in a conflicting manner by the tax authorities and taxpayers, thereby giving rise to disputes on this issue. It has been contended that subsequent to introduction of section 115QA in the Act and placing reliance on a decision of the Authority for Advance Ruling (AAR No. P of 2010), income-tax authorities, in some cases have sought to re-characterize the purchase considera .....

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..... 28.1 The Companies (Amendment) Ordinance, 1998 [subsequently enacted as the Companies (Amendment) Act, 1999], inserted section 77A in the Companies Act, 1956, which allows a company to purchase its own shares subject to certain conditions. The shares bought back have to be extinguished and physically destroyed and the company is precluded from making any further issue of securities within a peri .....

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..... the provisions contained in section 77A of the Companies Act, 1956. It has also inserted a new section, namely, section 46A in the income-tax Act, to provide that any consideration received by a shareholder, or a holder of other specified securities from any company on purchase of its own shares or other specified securities shall be, subject to provisions contained in section 48, deemed to be the .....

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..... ices have already been issued and assessment proceedings are pending, tax authorities shall complete the assessment keeping in view the above legal position. 6. The above may be brought to the notice of all for necessary compliance. 7. Hindi version to follow. (Rohit Garg) Deputy Secretary to the Government of India (F.No.225/19/2016/ITA.II)
Circular, Trade Notice, Public Notice, Instruct .....

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