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[Cites 0, Cited by 0] [Section 40BB] [Entire Act]

Union of India - Subsection

Section 40BB(9) in Income Tax Rules, 1962

(9)Where the shares have been issued or allotted by a company on succession or conversion, as the case may be, of a firm into the company or succession of sole proprietary concern by the company, then the amount received by the company for issue of shares shall be determined in accordance with the following formula-
Amount received =| A-BC
A = book value of the assets in the balance-sheet as reduced by any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act and any amount shown in the balance-sheet as asset including the unamortized amount of deferred expenditure which does not represent the value of any asset;Explanation. - For determining book value of the assets, any change in the value of the assets consequent to their revaluation shall be ignored.B = book value of liabilities shown in the balance-sheet, but does not include the following amounts, namely:-
(a)capital, by whatever name called, of the proprietor or partners of the firm, as the case may be;
(b)reserves and surpluses, by whatever name called, including balance in profit and loss account;
(c)any amount representing provision for taxation, other than amount of tax paid, as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;
(d)any amount representing provisions made for meeting liabilities, other than ascertained liabilities;
and
(e)any amount representing contingent liabilities,
C = number of shares issued on conversion or succession.