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TMI Blog2020 (2) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... alue can be computed by two ways. (i) By Rule 11U and 11UA of Income Tax Rules 1962. (ii) By assessee company to the satisfaction of the AO. And as per the said provision, the value whichever is higher can be adopted. So, in this case when Rule 11U and 11UA is applied, the fair market value of shares is at ₹ 27 and the fair market value according to assessee company is at ₹ 150/-, so the higher value has been adopted, which is a plausible view. However, if the Ld. Pr. CIT has to hold the view of the AO to be erroneous as well as prejudicial to revenue he has to conduct enquiries and record a finding that assessee's calculation of fair market value of ₹ 150/- is unsustainable in law, which the Ld. Pr. CIT has not done in this case, though all facts were furnished before him. The action of AO, who has conducted enquiry on the issue and called for documents and after examination has not drawn any adverse view against the assessee, cannot be held to be erroneous as well as prejudicial to the revenue since the assessment order cannot be found to be erroneous as well as prejudicial on the fair market value of shares, the condition precedent to invoke rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the facts stated above, I am of the opinion that the assessment order made u/s. 143(3) dated 28.03.2016 for the AY 2013-14 is erroneous in so far as it is prejudicial to the interest of Revenue. You are therefore requested to appear personally or through your Authorised representative before the undersigned at room no. 60, 3rd floor, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700 069 on 07.03.2018 at 3.30 pm along with your written submissions, books of accounts documents, if any, to show as to why the assessment made u/s. 143(3) of the Income Tax Act, 1961 on 28.03.2016 should not be revised u/s. 263 of the Income-tax Act, 1961. Please note that no further adjournment will be given unless there is a valid reason and failure to comply with the requirement of the notice will lead to decision on merit. 4. Assailing the decision of the Ld. Pr. CIT in invoking the jurisdiction, the Ld. AR of the assessee brought to our notice that the Ld. Pr. CIT has invoked the revisional jurisdiction on the ground that the AO has not made enquiry in respect of the valuation of shares wherein the assessee had valued the shares at a face value of ₹ 10/- plus share premium of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional and consultancy charges paid, salary paid. Adjourned to 04.08.2015. 6. From the aforesaid queries raised in respect to the issue, our attention was drawn to the assessee's reply found placed at page 33 of paper book (letter dated 04.08.2015) wherein the details have been submitted as under: Sl. No. of Your Letter Particulars Reply 1 Names and Address of the Share Applicants Annexure 'A' annexed. Copies of Share applications are attached herewith. Copy of Return of Allotment in Form 2 Form 5 are also enclosed herewith. 2. Applicability of Section 56 sub-clause viib. The share have been issued by the company at fair value the valuation certificate of which was obtained from a Chartered Accountant. Copy of Valuation Certificate issued by the Chartered Accountant is enclosed herewith. 3. Details of squared off loan No loans were squared off during the year 4. Details of certain expenses Annexure & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CURRENT LIABILITIES (a) Short Term Borrowings 226,75,000 - 226,75,000 (b) Trade Payable 22,41,160 - 22,41,160 (c) Other Current Liabilities 4,31,200 - 4,31,200 (d) Short Term Provisions 1,23,551 1,23,551 - TOTAL(B) 645,99,896 392,52,536 253.47,360 Net Amount (A-B) (A-L) 2533,59,260 Total amount of Paid up equity shown in the Balance: PE 168,51,300 The Paid up value of each equity share PV 10 Value per share (A-L)X (PV) 150 (PE) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use,- (a) the fair market value of the shares shall be the value- (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature,- Whichever is higher;[emphasis given by us] ** ** ** (b) venture capital company , venture capital fund and venture capital undertaking shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10' 9. From the reading of the aforesaid provision the Ld. AR drew our attention to Explanation 1 to clause (viib) of sec. 56(2) of the Act, the fair market value shall be the value (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pr CIT during revisional proceedings that as per Explanation 1 to clause (viib) of Section 56 of the Act, the fair market value of the shares shall be the value- (i) As may be determined in accordance with such method as may be prescribed; or (ii) As may be substantiated by the Company to the - satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. Accordingly, the fair market value of shares of the company has been arrived at by substituting the cost price of the assets of the company with fair value of those assets. The valuation had been arrived at by following the below mentioned basis:- (a) Our company holds 1290000 equity shares of M/s Shiv Edibles which is equal to 36.35% equity capital of the said company. (b) Similarly, the company holds 3,50,000 equity shares of M/s. Shiv Agrevo Ltd which is equal to 19.96% equity shares of that company. (c) Since both these companies are our group company/Associates, in which we hold significant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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