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TMI BlogClarification regarding nature of share Buy-back transactions under Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... Buy-back transactions under Income-tax 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 , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 115Q of the Act w.e.f. 01.04.2003 till 31.05.2013 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 authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues arising out of the provision to allow buy-back of shares by the companies- 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 destr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de that dividend does not include any payment made by a company on purchase of its own shares in accordance with 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken place prior to 01.06.2013 and the case is covered under section 46A read with section 2(22)(iv) of the Act . In cases where notices 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 foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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