Shares allotted to holding company by wholly owned subsidiary. ...

Shares allotted to holding firm by subsidiary at DCF value of CCPS is valid. Can't reject prescribed method. Losses later irrelevant. Intra-group transaction not tax evasion.

Case Laws Income Tax

July 27, 2024

Shares allotted to holding company by wholly owned subsidiary. Discounted Cash Flow (DCF) method adopted for valuing Compulsory Convertible Preference Shares (CCPS) is legitimate as per Rule 11UA. Assessing Officer cannot reject prescribed valuation method. Reliance on subsequent financial losses to question valuation is misplaced; projections must be assessed based on facts at the time of valuation, not future outcomes. Transaction between wholly owned subsidiary and holding company does not create unaccounted income or inflated share value for tax evasion unless specifically proved. Addition u/s 56(2)(viib) deleted. Revenue's appeal dismissed.

View Source

← Previous Next →

Shares allotted to holding company by wholly owned subsidiary. ...

Shares allotted to holding firm by subsidiary at DCF value of CCPS is valid. Can't reject prescribed method. Losses later irrelevant. Intra-group transaction not tax evasion.

Case Laws Income Tax

July 27, 2024

You may also like:

Addition u/s 56 - Issue of shares at premium - The ITAT recognizes that the holding company's value is directly impacted by the performance of its subsidiary and...

Supply of Services - activity of holding of shares of subsidiary company by holding company - During the proceedings, the Central and State Governments issued...

Addition u/s 56(2)(vii)(c)(ii) - allotment of shares to assessee shareholder at a value lower - whether Tax to be paid by the shareholders or the company? - The shares...

Section 56(2)(viib) deals with the consideration received by a company for issue of shares at a premium. The assessee company issued equity shares at a premium, which...

Addition u/s 56(2)(viib) - Method of valuation of shares - closely held company issues its shares at a premium - The tribunal sided with the assessee, affirming the FMV...

The ITAT held that u/s 56(2)(viib), addition on premium amount in excess of FMV for issuing Optional Convertible Preference Shares to holding company is unsustainable....

Excess premium charged on issue of shares u/s.56(2)(viib) - The value adopted by the Assessing Officer under net asset value method even though a prescribed method does...

Entitled for exemption u/s 47(v) with respect to the transfer of land - Holding company - determination of 100% subsidiary company where 25 shares held by 6 nominees -...

When the assessee has been allotted certain shares as consideration for property transfer, then the question of value of those shares by invoking Section 56(2)(vii)(c)...

Valuation of shares at a premium u/s 56(2)(viib) - Keeping in view that DCF is correct method of determining the FMV of the unquoted shares, the assessee has option to...

Transfer of ESOP/ESPP/RSU by foreign holding company to employees of domestic subsidiary company does not attract GST where no additional fee, markup or commission is...

Addition u/s. 56[2] [viib] - method for valuation of the shares - equity and preference shares allotted by assessee to various residents at a premium - Discounted Cash...

The case involves the interpretation of u/s 55(2)(b)(i) and u/s 55(2)(aa)(B)(iiia) of the Income Tax Act regarding the cost of acquisition of bonus shares. The Tribunal...

Income from other sources u/s 56(2)(viib) - determining the share value of the premium - Method of valuation of shares - AO did not point out any flaw in the method of...

Addition u/s 68 - unexplained cash credit in the form of share capital with premium - when all these corporate entities are still existing and doing business and have...

Quick Updates: