Kalpesh, who ran a startup then, faced scepticism from the ITO, who suspected that high venture capital investments in his company, despite its losses, were part of a money-laundering scheme.
The ITO added the share premium as "income from other sources", resulting in a significant tax demand.
The startup was compelled to pay one-fifth of the substantial tax demand upfront.
It appealed the assessment, but the Commissioner of Income Tax (Appeals) rejected it as expected. The company then turned to the Income Tax Appellate Tribunal, an independent judicial body, where it finally won.
But its ordeal did not end there. Securing a refund with a mere half per cent simple interest per month (in contrast to the one per cent simple interest charged for delays by taxpayers) required persistent follow-ups and took five years. Meanwhile, the company nearly collapsed due to the capital tied up with the tax department.
This story is from the August 12, 2024 edition of Business Standard.
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This story is from the August 12, 2024 edition of Business Standard.
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