[aaykarbhavan] Query on Sec 56(2)(viia) & Rule 11UA

A company has been incorporated in India in Feb 2014 wherein 51 % equity capital is subscribed by a German Co and rest 49 % is subscribed by indian promoters. Thus it is a foreign company.

The company so incorporated has received contribution toward equity capital in June 2014 from the German co & Indian promoters in the ratio of 51:49 respectively.The shares are now being allotted as right shares against such contribution.

The shares must be allotted on the basis of valuation of future cash flows on DCF method as per FEMA guidelines. Thus the shares shall be allotted on premium since the DCF method calculation suggest so.

My query is whether Sec 56(2)(viib) and Rule 11UA are duly complied by obtaining the CA certificate for DCF Method of valuation of shares under FEMA and whether the AO shall not raise any query on the premium so charged ?

Answers & suggetions on above query shall be obliging.

CA M S Tapuriah

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Posted by: madhu tapuriah <tapuriahmadhu@yahoo.co.in>

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