Chapter 3: Income from Other Sources

CHAPTER

3 Income from Other Sources

Question 1
Mrs. Harini Rao who draws salary of `12,000 p.m. received the following gifts during the Previous
Year 2023-24.
(i) Gift of `1,50,000/- on 15.05.2023 from her close friend.
(ii) Gift of jewellery worth `3,00,000/- on 01.08.2023 from her fiancée.
(iii) Gift of `51,000/- each received from her two friends on the occasion of her marriage on
30.10.2023
(iv) Gift of `51,000/- on 01.12.2023 from her father’s sister
(v) Gift of `21,000/- from her husband’s friend on 01.01.2024
(vi) Gift of `25,000/- on 12.01.2024 from her family friend
(vii) Gift of `11,000/- on 12.02.2024 from her brother’s mother-in-law
(viii) Gift of `75,000/- from her sister-in-law
Compute her Gross Total Income for A.Y. 2024-25. Assume assessee not opted section 115BAC.
Answer
Name of the Assessee: Mrs. Harini Rao
Previous Year: 2023-24 Assessment Year: 2024-25
Computation of Gross Total Income
Particulars ` `
Salary: `12000 x 12 (after standard deduction of 50k u/s 16) 94,000
Income from Other Sources
(i) Cash Gift from close friend is taxable 1,50,000
(ii) Gift of jewellery is taxable (“Jewellery” is included in the 3,00,000
definition of property u/s 56(2)(x) & FMV exceeds `50,000)
(iii) Gifts received from her two friends are exempt as it’s received NIL
on the occasion of marriage
(iv) Gift from her father’s sister is exempt as the donor is covered NIL
in the definition of ‘relative’.
(v) Gift from her husband’s friend is taxable 21,000
(vi) Gift from her family friend is taxable 25,000

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Chapter 3: Income from Other Sources
Particulars ` `
(vii) Gift from her brother’s mother-in-law is taxable as the donor 11,000
is not covered in the definition of ‘relative’
(viii) Gift from her sister-in-law (husband’s sister is exempt as the NIL 5,07,000
donor is covered in the definition of ‘relative’
Gross Total Income 6,01,000
Question 2
Mr. Ganesh received the following gifts during P.Y. 2023-24 from his friend Mr. Sundar –
(i) Cash Gift of `51,000/- on his birthday on 19th June, 2023
(ii) 50 Shares of Beta Ltd on 19th June 2023, the FMV of which was `60,000 on his birthday.
(iii) 100 shares of Alpha Ltd, FMV Ltd of which was `70,000 on the date of transfer. The gift was
received on the occasion of Diwali. Mr. Sundar had originally purchased the shares on
10.08.2023 at a cost of `50,000/-
Further on 20th November, 2023, Mr. Ganesh purchased land from his sister’s mother-in-law for
`5,00,000/-. The stamp value of land was `7,00,000/-.
On 15th February, 2024, he sold 100 shares of Alpha Ltd for `1,00,000/-.
Compute the Income of Mr. Ganesh chargeable under the head “Income from Other Sources” and
“Capital Gains” for A.Y. 2024-25
Answer
Name of Assessee: Mr. Ganesh
Previous Year: 2023-24 Assessment Year: 2024-25
Computation of Income from Other Sources
Particulars `
(i) Cash Gift received on 19.06.2023 is taxable u/s 56(2)(x) 51,000
(ii) Value of Shares of beta Ltd gifted by Mr. Sundar on 19th June, 2023 is taxable, as 60,000
“Shares” are included within the definition of “Property”
(iii) Fair Market Value of Shares of Alpha Ltd is Taxable 70,000
(iv) Purchase of land for inadequate consideration on 20.11.2023 would attract the 2,00,000
provisions of Section 56(2 (x), if the difference between stamp duty value and actual
consideration exceeds `50,000/- & SDV is more than 110% of consideration. Since,
the difference between stamp duty value and consideration is `2,00,000/- (i.e.
`7,00,000/- - `5,00,000/-), it is chargeable to tax. Sister’s mother-in-law is not a
relative within the meaning of Section 56(2)(x)
Income from Other Sources 3,81,000
Computation of Capital Gains
Particulars `
Sales Consideration (15.02.2024) 1,00,000
Less : Cost of acquisition [deemed to be the Fair Market Value charged to tax — 70,000
u/s 56(2)(x)]
Short Term Capital Gain 30,000

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 Chapter 3: Income from Other Sources
Question 3
Mr. X received the following gifts/amounts during F.Y. 2023-24
(i) Gift of bullion worth `60,000/- on his birthday from his friend
(ii) Received a car from his cousin on payment of `1,00,000/-. FMV of which was `4,00,000/-
(iii) Received cash gift of `18,000/- each from three of his friends A, B and C on 24.09.2023
(iv) Acquired an office building on 22.11.2023 from his friend Q for a consideration of `10 Lakhs,
stamp value of which is `20 Lakhs.
(v) In respect of Land of Mr. X acquired by Railways in the year 2015, he received the following
amount on 25.12.2023 as interest on enhanced compensation on the order of the court –
Relating to Previous Years `
2020-21 1,45,000/-
2021-22 1,75,000/-
2022-23 1,10,000/-
You are required to compute the Income of Mr. X chargeable under the head “Income from
other Sources” for A.Y. 2024-25, assuming that he has no other income.
Answer
Name of the Assessee: Mr. X
Previous Year: 2023-24 Assessment Year: 2024-25
Computation of Income from Other Sources
Particulars `
(i) Since bullion is included in the definition of “Property”, therefore, when bullion is 60,000
received without consideration, the same is taxable under section 56(2)(x) as the
aggregate FMV of bullion exceeds `50,000/-
(ii) Since car is not included in the definition of property, therefore the difference of `3 NIL
Lakhs between FMV and purchase price of car is non- taxable under section
56(2)(x)
(iii) Cash gift received from friends is taxable u/s 56(2)(x), since its aggregate value 54,000
exceeds `50,000/- (`18,000 x 3)
(iv) Immovable property (office building) purchased for inadequate consideration is 10,00,000
taxable u/s 56(2)(x). Therefore, the difference of `10 Lakhs between stamp duty
value and purchase price of building is taxable u/s 56(2)(x)
(v) As per section 145B, interest received during the year on enhanced compensation 2,15,000
shall be deemed to be the Income of the year in which such interest is received
irrespective of the method of accounting followed by the Assessee. Hence, the
interest received by Mr. X is taxable in P.Y. 2023-24 (`1,45,000 + `1,75,000 +
`1,10,000 = `4,30,000)
Less: Deduction u/s 57 @ 50% of `4,30,000 (`2,15,000)
Income from Other Sources 13,29,000
Question 4
Mr. X Transferred his residential house to Y for `10 Lakhs on 01st April, 2023. The value of the said
house as per Stamp Valuation Authority was `16 Lakhs. Mr. Y is a childhood friend of Mr. X.
Mr. X gifted a plot of land (purchased by him on 01st August, 2010) to Mr. Y on 01st July, 2023.
The value as per stamp valuation authority is `8 Lakhs. Mr. Y sold the land on 01st March, 2024 at
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Chapter 3: Income from Other Sources
`15 Lakhs. Compute the income of Mr. Y. chargeable under the Heads “Capital Gains” and “Income
from Other Sources” for A.Y. 2024-25.
CII – 2010-11 : 167; 2023-24 : 348
Answer
Name of the Assessee: Mr. Y
Previous Year: 2023-24 Assessment Year: 2024-25
Computation of Income chargeable under the Head “Capital Gains” and
“Income from Other Sources”
Particulars `
Income chargeable under the Head Capital Gains:
Sales Consideration 15,00,000
Less: Cost of Acquisition (Deemed to be the stamp value charged to tax u/s — 8,00,000
56(2)(x) as per section 49(4)). (Note 3)
Short Term Capital Gains. (Note 4) 7,00,000
Income from other sources
Difference between stamp duty value of residential house and actual consideration 6,00,000
paid (Residential house received for inadequate consideration) (Note-1)
Stamp duty value of plot of land received without consideration 8,00,000
[Taxable u/s 56(2)(x) - (Note 2)]
IFOS 14,00,000
Notes:
(1) Transfer of immovable property for inadequate consideration attracts the provisions of Section
56(2)(x), if the difference between the stamp duty value and actual consideration exceeds `50,000/ &
SDV more than 110% of consideration. Therefore, the provisions of section 56(2)(x) are attracted in
respect of transfer of residential house by Mr. X to Mr. Y for inadequate consideration. The
difference of `6,00,000/- between stamp duty value and actual consideration is taxable u/s 56(2)(x).
(2) The provisions of Section 56(2)(x) are also attracted in respect of transfer of immovable property
without consideration, if the stamp duty value of such property exceeds `50,000/-. In this case, since
Mr. Y has received a plot of land from Mr. X, a non-relative, without consideration and the stamp
duty value of `8 Lakhs exceeds `50,000/-, the entire stamp duty value of `8 Lakhs is chargeable to
tax under section 56(2)(x).
(3) Section 49(4) provides that where the capital gain arises from the transfer of such property which has
been subject to tax u/s 56(2)(x) the cost of acquisition shall be deemed to be the value taken into
account for the purpose of Section 56(2)(x). Therefore `8 Lakhs would be the cost of acquisition of
land in this case.
(4) The resultant capital gains will be short term capital gains since for calculating the period of holding,
in a case where cost is computed u/s 49(4), the period of holding of the previous owner is not to be
included. As per Section 2(42A), the period of holding will include the period of holding of the
previous owner only in the case of a capital asset which becomes the property of the Assessee in the
circumstances in section 49(1) [i.e. where cost to previous owner would be deemed as the cost of
acquisition]

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 Chapter 3: Income from Other Sources
Question 5
From the following particulars, compute the Gross Total Income of Mr. Z for A.Y. 2024-25.
(i) Mr. Y transferred his residential house to Mr. Z for `10 Lakhs on 01.04.2023. The value of
the said house as per stamp valuation authority was `18 Lakhs. Mr. Z is a childhood friend
of Mr. Y.
(ii) Mr. Z acquired a car from his cousin on payment of `2,50,000/, FMV of which was
`4,00,000/-
(iii) Land of Mr. Z was acquired by railways in 2017. On 15.12.2023, he received `1,70,000 as
interest on enhanced compensation on the order of court.
(iv) On a Fixed Deposit of `10 Lakhs, in a bank, Mr. Z received an interest of `90,000/-. He had
also borrowed `50 Lakhs from the same bank, on security of the fixed deposit and was
liable to pay `50,000 by way of interest to the bank. He, therefore, offered the difference
between the two amounts i.e. `40,000 as “Income from Other Sources”.
Answer
Name of the Assessee: Mr. Z
Previous Year: 2023-24 Assessment Year: 2024-25
Computation of Gross Total Income
Particulars `
Income from Other Sources:
(i) Receipt of immovable property for inadequate consideration attracts the 8,00,000
provisions of section 56(2)(x). The difference between the stamp duty value (`18
Lakhs) and the actual consideration (`10 Lakhs) would be taxable
(ii) Since car is not included in the definition of “property” under section 56(2)(x), NIL
receipt of car for inadequate consideration would not attract the provisions of
section 56(2)(x)
(iii) Interest on enhanced compensation amounting to `1,70,000/- would be taxable u/s 85,000
56(2)(viii) in the year of receipt. Deduction @ 50% is allowable u/s 57(iv).
Hence, the taxable interest is 50% of `1,70,000/-
(iv) Interest of `90,000/- received on fixed deposit is income of Mr. Z. The interest of 90,000
`50,000/- on loan taken by Mr. Z from the same bank on security of the fixed
deposit will not go to reduce the income by way of interest on fixed deposit [CIT
v D.V. Gopinathan (2001)]
Gross Total Income 9,75,000
Question 6
Mr. Hari, a property dealer, sold a building in the course of his business to his friend Mr. Rajesh,
who is a dealer in automobile spare parts, for `90 lakhs on 1.1.2024, when the stamp duty value
was `150 lakh. The agreement was, however, entered into on 1.9.2023 when the stamp duty vale
was `140 lakh. Mr. Hari had received a down payment of `15 lakh by a crossed cheque from Mr.
Rajesh on the date of agreement. Discuss the tax implications in the hands of Mr. Hari and Mr.
Rajesh, assuming that Mr. Hari has purchased the building for `75 lakhs on 12th July, 2022.
Would your answer be different if Hari was a share broker instead of a property dealer?

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Chapter 3: Income from Other Sources
Answer
Case 1: Tax implication if Mr. Hari is property dealer
In the hands of Mr. Hari In the hands of Mr. Rajesh
In the hands of Hari, the provisions of section Since Mr. Rajesh is a dealer in automobile spare parts,
43CA would be attracted, since the building the building purchased would be capital asset in his
represents his stock-in-trade and he has transferred hands. The provisions of section 56(2)(x) would be
the same for a consideration less than the stamp attracted in the hands of Mr. Rajesh who has received
duty value on the date of registration. immovable property, being a capital asset, for
inadequate consideration.

In the hands of Mr. Hari In the hands of Mr. Rajesh

Therefore, `75 lakh, being the difference between Therefore, `60 lakh, being the difference between the
the stamp duty value on the date of registration stamp duty value of the property on the date of
(i.e. `150 lakh) and the purchase price (i.e., `75 registration (i.e., `150 lakh) and the actual
lakh), would be chargeable as business income in consideration (i.e. `90 lakh) would be taxable under
the hands of Mr. Hari. Since the payment made by section 56(2)(x) in the hands of Mr. Rajesh, since the
cross cheque & not by a/c payee cheque/draft or payment is made by crossed cheque and not account
ECS. payee cheque/draft or ECS.
Case 2: Tax implication if Mr. Hari is stock broker.
In the hands of Mr. Hari In the hands of Mr. Rajesh
In case Mr. Hari is stock broker and not a property There would be no difference in the taxability in the
dealer, the building would represent his capital hands of Mr. Rajesh, whether Mr. Hari is a property
would represent his capital asset and not stock-in- dealer or a stock broker. Therefore, the provisions of
trade. In such a case, the provisions of section 50C section 56(2)(x) would be attracted in the hands of Mr.
would be attracted in the hands of MR. Hari and Rajesh who has received immovable property, being a
`75 lakh, being the difference between the stamp capital asset, for inadequate consideration. Therefore,
duty value on the date of registration (i.e., `150 `60 lakh, being the difference between the stamp duty
lakh) and the purchase price (i.e., `75 lakh) would value of the property on the date of registration (i.e.,
be chargeable as short-term capital gains. `150 lakh) and the actual consideration (i.e., `90 Lakh)
would be taxable under section 56(2)(x) in the hands of
Mr. Rajesh.
Note:
As per section 50C/43CA/56(2)(x), stamp duty value on the date of agreement can be adopted, if whole or
part of consideration is received paid by AC payee cheque/DD/ECS/any other electronic modes may be
prescribed on or before the date of agreement.

Question 7
X acquires a commercial flat from Y on December 10, 2023. Cost of acquisition and stamp duty
value are as follows –
Case 1 ` Case 2 ` Case 3 ` Case 4 ` Case 5 `
Consideration 4,00,000 4,00,000 4,00,000 6,00,000 6,00,000
Stamp duty value 4,39,000 4,46,000 4,70,000 6,59,000 6,80,000
Discuss the tax consequences in the hands of X and Y.

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 Chapter 3: Income from Other Sources
Answer
Particulars Case 1 ` Case 2 ` Case 3 ` Case 4 ` Case 5 `
Consideration - (a) 4,00,000 4,00,000 4,00,000 6,00,000 6,00,000
110% of (a) - (b) 4,40,000 4,40,000 4,40,000 6,60,000 6,60,000
Stamp duty value - (c) 4,39,000 4,46,000 4,70,000 6,59,000 6,80,000
Relevant conditions to attract
section 56(2)(x)
Whether (c) is more than (b) No Yes Yes No Yes
Whether the excess of (c) over
No No Yes Yes Yes
(a) is more than `50,000
Amount taxable in the hands of Nil Nil 70,000 Nil 80,000
X under section 56(2)(x)
[applicable only if the above two
conditions are satisfied
simultaneously, taxable amount
will be (c) – (a)]
Section 50C Full value of 4,00,000 4,46,000 4,70,000 6,00,000 6,80,000
consideration for calculating
capital gains in the hands of Y
Section 49(4) Cost of acquisition 4,00,000 4,00,000 4,70,000 6,00,000 6,80,000
in the hands of X (for calculating
capital gain at the time of
transfer of commercial flat)
Question 8
X acquires an immovable property from Y during December 2023. Relevant data is given below –
Case 1 ` Case 2 ` Case 3 ` Case 4 ` Case 5 `
Stamp duty value on 4,00,000 4,00,000 4,50,000 4,50,000 7,00,000
date of agreement
Stamp duty value on 4,70,000 4,70,000 4,90,000 4,90,000 7,80,000
date of registration
Consideration for 3,81,000 3,81,000 4,27,500 4,27,500 7,10,000
acquiring property from
Y
Whether advance is Yes No Yes No No
paid to Y by an account-
payee cheque/draft/
bank transfer on or
before the date of
agreement
Discuss the tax consequences in the hands of X and Y.

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Chapter 3: Income from Other Sources
Answer
Particulars Case 1 ` Case 2 ` Case 3 ` Case 4 ` Case 5 `
Consideration (a) 3,81,000 3,81,000 4,27,500 4,27,500 7,10,000
110% of (a) (b) 4,19,100 4,19,100 4,70,250 4,70,250 7,81,000
Stamp duty value (if
advance is paid by
account payee cheque/
draft/bank transfer on or
before the date of
agreement, stamp duty
value on the date of (c) 4,00,000 4,70,000 4,50,000 4,90,000 7,80,000
agreement is taken,
otherwise stamp duty
value on the date of
registration is
considered)
Relevant conditions to
attract section 56(2)(x) –
Whether (c) is more than No Yes No Yes No
(b)
Whether the excess of (c)
over (a) is more than
`50,000 No Yes No Yes Yes
Amount taxable in the
hands of X under section Nil 89,000 Nil 62,500 Nil
56(2) (x) [applicable only
if the above two
conditions are satisfied
simultaneously, taxable
amount will be (c) – (a)]
Section 50C 3,81,000 4,70,000 4,27,500 4,90,000 7,10,000
Full value of
consideration for
calculating capital gains
in the hands of Y
Section 49(4) 3,81,000 4,70,000 4,27,500 4,90,000 7,10,000
Cost of acquisition in the
hands of X (for
calculating capital gain at
the time of transfer of
commercial flat)
Question 9
Mr. A, a dealer in shares, received the following without consideration during the P.Y.2023-24 from
his friend Mr. B, -
(1) Cash gift of ` 75,000 on his anniversary, 15th April, 2023.
(2) Bullion, the fair market value of which was ` 60,000, on his birthday, 19th June, 2023.

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 Chapter 3: Income from Other Sources
(3) A plot of land at Faridabad on 1st July, 2023, the stamp value of which is ` 5 lakh on that
date. Mr. B had purchased the land in April, 2010.
Mr. A purchased from his friend Mr. C, who is also a dealer in shares, 1000 shares of X Ltd. @ `
400 each on 19th June, 2023, the fair market value of which was ` 600 each on that date. Mr. A
sold these shares in the course of his business on 23rd June, 2023.
Further, on 1st November, 2023, Mr. A took possession of property (building) booked by him two
years back at ` 20 lakh. The stamp duty value of the property as on 1st November, 2023 was ` 32
lakh and on the date of booking was ` 23 lakh. He had paid ` 1 lakh by account payee cheque as
down payment on the date of booking.
On 1st March, 2024, he sold the plot of land at Faridabad for ` 7 lakh.
Compute the income of Mr. A chargeable under the head “Income from other sources” and “Capital
Gains” for A.Y.2024-25.
Answer
Computation of “Income from other sources” of Mr. A for the A.Y.2024-25
Particulars `
(1) Cash gift is taxable under section 56(2)(x), since it exceeds ` 50,000 75,000
(2) Since bullion is included in the definition of property, therefore, when bullion is 60,000
received without consideration, the same is taxable, since the aggregate fair market
value exceeds ` 50,000
(3) Stamp value of plot of land at Faridabad, received without consideration, is taxable 5,00,000
under section 56(2)(x)
(4) Difference of ` 2 lakh in the value of shares of X Ltd. purchased from Mr. C, a dealer -
in shares, is not taxable as it represents the stock-in-trade of Mr. A.
Since Mr. A is a dealer in shares and it has been mentioned that the shares were
subsequently sold in the course of his business, such shares represent the stock-in-
trade of Mr. A.
(5) Difference between the stamp duty value of ` 23 lakh on the date of booking and the 3,00,000
actual consideration of ` 20 lakh paid is taxable under section 56(2)(x) since the
difference exceeds ` 1 lakh being, the higher of ` 50,000 and 10% of consideration.
Income from Other Sources 9,35,000
Computation of “Capital Gains” of Mr. A for the A.Y.2024-25
Particulars `
Sale Consideration 7,00,000
Less: Cost of acquisition [deemed to be the stamp value charged to tax under
section 56(2)(x) as per section 49(4)] 5,00,000
Short-term capital gains 2,00,000
Note – The resultant capital gains will be short-term capital gains since for calculating the period of holding,
the period of holding of previous owner is not to be considered.
Question 10
Discuss the taxability or otherwise of the following in the hands of the recipient under section
56(2)(x) of the Income-tax Act, 1961 -
(i) Akhil HUF received ` 75,000 in cash from niece of Akhil (i.e., daughter of Akhil’s sister).
Akhil is the Karta of the HUF.

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Chapter 3: Income from Other Sources
(ii) Nitisha, a member of her father’s HUF, transferred a house property to the HUF without
consideration. The stamp duty value of the house property is ` 9,00,000.
(iii) Mr. Akshat received 100 shares of A Ltd. from his friend as a gift on occasion of his 25th
marriage anniversary. The fair market value on that date was ` 100 per share. He also
received jewellery worth ` 45,000 (FMV) from his nephew on the same day.
(iv) Kishan HUF gifted a car to son of Karta for achieving good marks in XII board examination.
The fair market value of the car is ` 5,25,000.
Answer
Taxable/Non- Amount Reason
taxable liable to tax
(`)
(i) Taxable 75,000 Sum of money exceeding ` 50,000 received without consideration
from a non-relative is taxable under section 56(2)(x). Daughter of
Mr. Akhil’s sister is not a relative of Akhil HUF, since she is not a
member of Akhil HUF.
(ii) Non-taxable Nil Immovable property received without consideration by a HUF from
its relative is not taxable under section 56(2)(x). Since Nitisha is a
member of the HUF, she is a relative of the HUF. However, income
from such asset would be included in the hands of Nitisha under
64(2).
(iii) Taxable 55,000 As per provisions of section 56(2)(x), in case the aggregate fair
market value of property, other than immovable property, received
without consideration exceeds ` 50,000, the whole of the aggregate
value shall be taxable. In this case, the aggregate fair market value of
shares (` 10,000) and jewellery (` 45,000) exceeds ` 50,000. Hence,
the entire amount of ` 55,000 shall be taxable.
(iv) Non-taxable Nil Car is not included in the definition of property for the purpose of
section 56(2)(x), therefore, the same shall not be taxable.
Question 11
Discuss the applicability of the provisions of Section 56(2)(viib) in respect of the shares issued by
the following closely held companies to resident Indians –
Company Consideration Face Value of FMV of No. of shares
received for issue of Share (`) share (`) issued
Share (`)
Win (P) Ltd 370 300 350 1,00,000
Gain (P) Ltd 330 300 350 2,00,000
Profit (P) Ltd 290 300 280 3,00,000
Top (P) Ltd 310 300 275 4,00,000
Answer
Applicability of the provisions of Section 56(2)(viib)
Company Face Value FMV of Consideration Applicability of Section 56(2)(viib)
of Shares Shares (`) received (`)
(`)
Win (P) 300 350 370 The provisions of section 56(2)(viib) are
attracted in this case since the shares are
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 Chapter 3: Income from Other Sources
Company Face Value FMV of Consideration Applicability of Section 56(2)(viib)
of Shares Shares (`) received (`)
(`)
Ltd issued at a premium (i.e. issue price
exceeds the Face value of shares). The
excess of the issue price of the shares over
the FMV would be taxable u/s 56(2)(viib)
i.e. `20 Lakhs, being `20 (`370 – `350) per
share x 1,00,000 shares shall be treated as
income in the hands of Win (P) Ltd.
Gain (P) 300 350 330 The provisions of Section 56(2)(viib) are
Ltd attracted since the shares are issued at a
premium. However, no sum shall be
chargeable to tax under the said section in
the hands of Gain (P) Ltd as the shares are
issued at a price less than the FMV of
shares.
Profit (P) 300 280 290 Section 56(2)(viib) is not attracted since the
Ltd shares are issued at a discount, though the
issue price is greater than the FMV
Top (P) Ltd 300 275 310 The provisions of Section 56(2)(viib) are
attracted in this case since the shares are
issued at a premium. The excess of the
issue price of the shares over the FMV
would be taxable u/s 56(2)(viib). Therefore,
`140 Lakhs being `35 (`310 – `275) per
share x 400000 shares, shall be treated as
income in the hands of Top (P) Ltd.

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