Himachal HC Angel tax provisions not applicable on Conversion of Loan in Equity

Recently, the Hon’ble Himachal Pradesh High Court in the case of Pr. Commissioner of Income Tax-I vs M/s I.A. Hydro Energy (P) Limited [ITA No. 4 of 2024] had an occasion to analyse taxation aspects u/s 56(2)(viib) of the Income Tax Act, 1961 in relation to conversion of pre-existing loan into equity. 

The High Court concurred with the decision passed by the Income Tax Appellate Tribunal [ITAT] and the Commissioner of Income Tax (Appeals) [CIT(A)] and observed that the angel tax provisions shall not be applicable pursuant to conversion of loan into equity shares 

In the attached newsflash, we have summarised the said ruling pronounced on May 31, 2024.