Scribd
Upload
29 views1 page

Circular 16 2019

Circular No. 16/2019 addresses the assessment procedures for Startup Companies recognized by the DPIIT, particularly concerning the applicability of section 56(2)(viib) of the IT Act. It outlines that for recognized startups under limited scrutiny, no verification on section 56(2)(viib) will be conducted, while for those under complete scrutiny, the issue will not be pursued without supervisory approval. Additionally, startups without DPIIT approval will also require supervisory approval for any inquiries related to section 56(2)(viib).

Uploaded by

tally3tally
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
29 views1 page

Circular 16 2019

Circular No. 16/2019 addresses the assessment procedures for Startup Companies recognized by the DPIIT, particularly concerning the applicability of section 56(2)(viib) of the IT Act. It outlines that for recognized startups under limited scrutiny, no verification on section 56(2)(viib) will be conducted, while for those under complete scrutiny, the issue will not be pursued without supervisory approval. Additionally, startups without DPIIT approval will also require supervisory approval for any inquiries related to section 56(2)(viib).

Uploaded by

tally3tally
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Circular No. 16/2019 [F.No.

173/149/2019-ITA-I], dated 7-8-2019

Instances have come to the notice of the Board that notices u/s 143(2)/147 have been issued by the
Assessing Officers in respect of Startup Companies, before the issue of notification of the Department
for Promotion of Industry and Internal Trade (henceforth referred to as 'DPIIT') dated 19.2.2019 or
even afterwards which are presently pending for disposal. These companies have been recognized by
the DPIIT after the issue of their notification dated 19.2.2019.
2. The DPIIT vide Notification No. G.S.R. 127 (E), dated 19.2.2019, has laid down that the provisions
of section 56(2)(viib) of the IT Act, 1961 shall not apply to any consideration received by a Startup
Company, if the Startup Company fulfils the conditions mentioned in para 4(i) and 4(ii) of the said
notification and is recognized by the DPIIT.
3. In pursuance to the above, the Central Board of Direct Taxes (CBDT) had issued Notification
No.13/2019/F.No. 370142/5/2018-TPL(Pt.), dated 5th March, 2019 reiterating that the provisions of
clause (viib) of sub-section (2) of section 56 of the said Act shall not apply to consideration received by
a company for issue of shares that exceeds the face value of such shares, if the said consideration has
been received from a person, being a resident, by a company which fulfils the conditions specified in
para 4 of the notification dated 19.2.2019 issued by DPIIT.
4. In the light of the above, the following procedure is laid down with regard to the assessment of such
startup entities involving the issue of section 56(2)(viib).
(i) Where the Startup Company has been recognised by the DPIIT but the case is
selected under "limited scrutiny" on the single issue of applicability of section 56
(2)(viib), no verification on such issues will be done by the AOs during the
proceedings u/s 143 (3)/147 of the I.T. Act, 1961 and the contention of such
recognized Startup Companies on the issue will be summarily accepted.
(ii) Where the Startup Company has been recognized by the DPIIT but the case is
selected under "limited scrutiny" with multiple issues or under "complete scrutiny"
including the issue u/s 56(2)(viib), the issue of applicability of section 56(2)(viib)
will not be pursued during the assessment proceedings and inquiry or verification
with regard to other issues in such cases shall be carried out by the Assessing
Officer, only after obtaining approval of his/her supervisory officer. Due procedure
as per I.T. Act shall be followed with regard to other issues for which the case has
been selected.
(iii) Where the Startup Company has not got DPIIT approval and the case is selected for
scrutiny, inter olio on the grounds of applicability of section 56(2)(viib) or any other
issue/s, then also inquiry or verification in such cases shall be carried out by the
Assessing Officer, as per due procedure, only after obtaining approval of his/her
supervisory officer.

You might also like