Buy Back of Shares by Private or Unlisted Company

The provisions relating to buy-back of securities, under the Companies Act 2013 namely sections 68 to 70, which have been notified, have now repealed the provisions relating Companies Act, 1956.

Points to be noted:

1. A company may buy-back its own shares or other specified securities out of—

             (i) its free reserves; or

             (ii) the securities premium account; or

            (iii) the proceeds of any shares or other specified securities:

Value of FSI and TDR not to be included in Land Value u/s 50C of IT Act

Generally, the provisions of Indian tax laws provide that transfers of immovable property must be at a fair valuation. However, the Income Tax Appellate Tribunal (‘ITAT’), Mumbai Bench, has ruled, in Income-tax Officer v. Shri Prem Rattan Gupta, that the value of TDR and FSI cannot be the subject mattter of section 50C of the Income Tax Act, 1961.

Section 50C of ITA not applicable to transfer of Immovable Property held through Co.

In Irfan Abdul Kader Fazlani vs. ACIT (ITAT Mumbai) (Entire order available here) the assessee was the shareholder of a company called Kamala Mansion Pvt. Ltd (KMPL). KMPL owned flats in a building known as Om Vikas Apartments, located at Walkeshwar Road, Mumbai- 400 026. The assessee sold the shares for a sum of approximately  Rupees Thirty Seven Lakhs and Fifty One Thousand Only and capital gains were offered on that basis. The AO & CIT(A) held that by the sale of shares in the company, the assessee had in actual fact transferred the immovable property belonging to him, and it was merely an indirect way of transferring the flats, for lesser consideration

Introduction to Property Tax in India

Property tax in India is not as easy to understand as someone might think. However, if we dissect it into smaller and simpler to understand parts, it will definitely make things a lot easier.

The property tax rates in India have been rationalized to make them easier for public to understand. The changes have been made to make the tax system comply with the international property tax standards. Capital Value System (CVS) has been introduced in Bangalore. Similarly Delhi has set up a website making tax payments a lot easier. However, there are still a lot of misconceptions about property tax in India that need to be cleared. The most important question that often goes unanswered is

Cash Compensation Received by a Member of Housing Society Under Redevelopment Scheme, “Capital Receipt” not “Revenue receipt”

The Income Tax Appellate Tribunal at Mumbai, in the case of Kushal K Bangia, Mumbai v. Assessee  (ITA/No. 630/Mum/2006) (the entire case can be found here.) ruled that the cash compensation received by a member of the housing society under a redevelopment scheme from a developer should be treated as a “capital receipt” and, therefore, would not be taxable as “revenue receipt” in the hands of the member. As a result, the compensation would reduce the cost of acquisition of the new flat at the time of computing the capital gains in respect of the said new flat. The brief facts