2023 (8) TMI 1022 - AT - Income Tax

Addition on account of share premium received u/s 56(2) (viib) - AR submitted that the NCLT admitted the application filed under IBC Code 2016 Insolvency and Bankruptcy Code and the same has been admitted - HELD THAT - Considering the fact that the NCLT has declared moratorium consequently, as per Section 14 of the IBC 2016, it is order to prescribe the registration of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment decree or order in any court of law Tribunal arbitration, penal or other authorities. In view of the same, the present appeal filed by the Department of Revenue is deserves to be dismissed,

Summary

Issues Involved:
The issues involved in the judgment are the deletion of addition of share premium received u/s 56(2)(viib) of the Income Tax Act, 1961 and the assessment completed by the assessing officer at a different income amount than that returned by the appellant.

Deletion of Addition of Share Premium:
The appeal by the Revenue was against the order of the Learned Commissioner of Income Tax (Appeals)-3 for Assessment Year 2015-16, where the addition of Rs. 9,52,73,036/- on account of share premium received u/s 56(2)(viib) of the Income Tax Act, 1961 was deleted. The grounds of appeal raised by the Revenue focused on the error in deleting the said addition. The assessing officer was criticized for adding the share premium and considering the valuation date and relevant financial years incorrectly. The assessing officer's decision was deemed arbitrary, and various allegations and inferences made were considered erroneous. The assessing officer was also faulted for ignoring valuation reports and wrongly calculating the Net Asset Value of the share. Additionally, charging interest u/s 234A and initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 were contested. However, the National Company Law Tribunal's admission of the application under the Insolvency and Bankruptcy Code led to the dismissal of the Revenue's appeal due to the moratorium declared by NCLT, preventing the continuation of proceedings against the corporate debtor.

Assessment Discrepancy:
The appellant contested the assessment completed by the assessing officer at an income of Rs. 102,625,146/- instead of the income of Rs. 7,352,110/- as returned. The grounds of appeal raised by the appellant challenged the assessment as being bad in law and arbitrary. The assessing officer's decision to add Rs. 95,273,036/- on account of share premium u/s 56(2)(viib) was criticized, along with errors in considering the valuation date and relevant financial years. The assessing officer was faulted for adding share premium in the wrong assessment year and for disregarding valuation reports and miscalculating the Net Asset Value of the share. Moreover, charging interest u/s 234A and initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 were contested. Despite the appellant's objections, the appeal was dismissed due to the NCLT's moratorium, preventing further proceedings against the corporate debtor.