Tax alert: Deemed income provisions not applicable on conversion of outstanding loan to shares has been saved
Article
Tax alert: Deemed income provisions not applicable on conversion of outstanding loan to shares
8 July 2024
The Himachal Pradesh High Court has rendered its decision that loans received by the taxpayer in earlier years, but converted to shares in the current year, will not fall under the definition of ‘any consideration for issue of share received in the previous year’ and therefore will not attract the provisions of section 56(2)(viib) of the Income-tax Act, 1961. Further, it held that the right to select the valuation method vests with the taxpayer and the Assessing Officer can only verify valuation method adopted by the taxpayer but cannot substitute it by a different method.
