Section 56(2)(x)- Should anti-abuse provisions be applied to genuine fresh issuance of shares?

Prachi Goel – [2022] 135 taxmann.com 282 (Article)

Section 56 of the Income-tax Act, 1961 (“the IT Act”) aims to tax residuary incomes which are not covered under the specific heads of income i.e., “salaries”, “income from house property”, “profits and gains of business and profession” and “capital gains”.
Finance Act, 2017 inserted clause (x) in section 56(2) of the IT Act with effect from 1 April 2018. This clause inter alia provides that where a person receives any movable property for a consideration which is less than the fair market value1 (“FMV”) of the property, then the difference between FMV of such property and consideration paid by the recipient, is taxable as “Income from other sources” in the hands of recipient. The term “property” is a defined term which includes within its ambit “shares”

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