The Central Board of Direct Taxes (CBDT) has exempted the purchase of shares at a discount to the market price from income tax in companies undergoing insolvency proceedings and whose board has been taken over by the government. These exemptions would come into effect from April 1, 2020, and shall be applicable for the assessment year 2020-21 and thereafter.
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This may encourage investors to participate in the Yes Bank Reconstruction scheme or any other similar schemes of companies in whose cases under sections 241 and 242 of Companies Act are pending before the NCLT or NCLAT for alleged oppression and mismanagement.
The I-T exemption has been given on any movable property, being unquoted shares, of a company and its subsidiary received by a shareholder, where
(i) the National Company Law Tribunal(NCLT) has suspended the board of directors of such company and has appointed new directors nominated by the central government
(ii) where the resolution plan has been approved by the NCLT u/s 242 of the Companies Act, 2013 after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner.
CBDT: https://www.incometaxindia.gov.in/communications/notification/notification_40_2020.pdf
