In this edition, we bring to you certain important articles. The article on ‘Alternative Investment Funds – SEBI and FEMA Regulations’ will make you understand the other venues for raising funds to carry the business much efficiently. The article on ‘NFRA – Will they apply to Body Corporate’ is thought provoking and it is important that Ministry of Corporate Affairs release a clarification as to which body corporates the provisions of NFRA rules will apply.

The article on ‘Differential Treatment Inter- se Creditors’ deals with the recent judgment of Hon’ble NCLAT in the matters of Binani Industries Limited, wherein the Hon’ble NCLAT rejected the resolution plan which discriminated the creditors who are placed similarly. This is an important contribution to the jurisprudence on IBC and it will have significant effect in upcoming resolutions. The journal also deals with key recommendations by Insolvency Committee on Cross Border Insolvency which is to be adopted by India to tackle the issues in cross border insolvency matters.

Read more: SBS Wiki E Journal Dec 2018

Treatment of Income on Sale of Shares in ESOP Scheme – Perquisite or Capital Gain?

Legislative Background:

As per Section 15(1) of Income Tax Act, 1961 (Act) any salary due from employer or former employer to an assessee in the previous year, whether paid or not, is chargeable to tax under the head ‘Income from Salaries’. As per Section 17(1)(iv) of the Act, ‘salary’ includes ‘perquisites’ or ‘profit in lieu of salary or wages’.

Section 17(2)(vi) of the Act, the term ‘perquisite’ includes the value of specified securities which were granted under ESOP or sweat equity shares allotted or transferred, directly or indirectly, by employer or former employer, free of cost or at concessional rate to the assessee.

Read more: SBS i 15th Edition

Section 45(1) of Income Tax Act, 1961 provides for taxability of profits or gains on transfer of Capital Asset in the year of transfer. The term ‘transfer’ inter-alia includes any transfer allowing the possessing of immovable property in part performance of contract referred to in 53A of Transfer of Property Act, 1882 (‘TOPA’).

Sec 53A of TOPA protect the interest of the transferee in case where he as part of contract has performed his part either in full or part and any enjoying the possession of the property pending registration.

Read more: Relevance of Possession of Immovable Property - Direct Taxes

Ambit of 29A of IBC – Decoding ArcelorMittal v Satish Kumar Gupta

The recent judgment of the apex court in the case of ArcelorMittal India Private Limited vs Satish Kumar Gupta and Others has revealed the true ambit and intent of Section 29A of Insolvency and Bankruptcy Code, 2016 (IBC). Section 29A has been introduced with effect from 23.11.17 to restrict persons who are not eligible to become resolution applicants.

Read more: Decoding Section 29A of IBC - Insolvency & Bankruptcy Code