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Share Premium can be treated as Undisclosed If High Premium is not justified by Valuation Report

Bangalore bench of ITAT in the case of M/s. Cornerstone Property Investments Pvt. Ltd. vs. Income Tax Officer, ruled that Share premium received can be assessed as undisclosed income if the high premium is not justified by a valuation report and the high premium is not supported by the financials. 

In instant case Assessee engaged in the business of Real Estate filed its revised return declaring a loss. Following the consequential proceedings notice under section 147 issued, later dropped by the AO and finally, assessment was completed with the income of Rs.49.50 Crores shown as “Share Premium” as ‘Income from other sources’. 

On appeal, the CIT (A) upheld the action of the AO and the Assessee carried the matter to this tribunal. It was observed by the Assessing Officer that a company by name, M/s. Walden Properties Pvt. Ltd., had invested an amount of Rs.50 Crores and in lieu, thereof the assessee had issued 5 lakh shares of face value of Rs.10 per share. Accordingly, AO held the transaction was not the genuine one.

Article refererred: http://www.taxscan.in/share-premium-undisclosed-high-premium-valuation-report-itat/21513/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

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