Safe harbour saves share premium

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition made under Section 56(2)(viib) of the Income-tax Act on account of alleged excess share premium and also allowed deduction of professional expenses that had been treated as capital expenditure. 

The Tribunal held that the difference between the issue price and the valuation determined under Rule 11UA fell within the 10% safe harbour introduced by CBDT Notification No. 81/2023, which was held to be curative and retrospectively applicable. 

It further ruled that due diligence and advisory expenses incurred in connection with business operations and growth did not result in the creation of any capital asset and therefore constituted allowable revenue expenditure.