9911796707
TMI Blog2021 (4) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income Tax Act, 1961 [for short 'the Act']by exercising jurisdiction u/s 263 of the Act. 2. Brief facts of the case are that the assessee company filed its return of income for the assessment year under consideration declaring loss of Rs. 30,759/-. The case was selected for scrutiny and the A.O. passed assessment order under section 143(3) of the Act making addition of Rs. 30,446/- under section 14A of the Act. Subsequently, the Ld. PCIT noticed that the assessee had received share application money amounting to Rs. 11,27,00,000/- for 22,54,000 shares during the FYs 2006-07 to 2013-14 having face value of Rs. 10 and premium of Rs. 40/- per share. Out of the said amount, Rs. 3,10,00,000/- was received during the FY 2012-13 and Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Revenue. 3. On the facts and circumstances of the case, the learned PCIT(C) has erred both on facts and in law in ignoring the fact that all the issues raised by him in notice under Section 263 were before the A.O. and as such the jurisdiction on this issue under Section 263 cannot be assumed, 4, On the facts and circumstances of the case, the learned PCIT(C) has erred both on facts and in law in rejecting the contention of the appellant that the issue of receipt of share application money during the year was before the AO in proceedings under Section 143(3) and was allowed after application of mind by him as such the same cannot be the matter for reassessment under Section 263 of the Act. 5 On the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that the issue raised by the Ld. PCIT in this case has already been decided in favour of the assessee by the Chandigarh Bench of the ITAT rendered in the case of ITO Vs. M/s Fred Enterprises Pvt. Ltd. ITA No. 1379/Chd/2018, wherein the Tribunal has held that the provisions of Section 56(2) (viib) are triggered in the year in which the shares are issued. Since the observations of the Ld. PCIT are contrary to the decision of the ITAT Chandigarh Bench in the aforesaid case, the impugned order is liable to be quashed. 6. On the other hand, the Ld. DR fairly admitted that the issue raised by the Ld. PCIT in this case is covered in favour of the assessee by the order of the Tribunal. However, the Ld. DR supported the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sustainable. The Revenue challenged the findings of the Ld. CIT before the ITAT. The coordinate Bench vide order dt. 30/06/2020 set aside the findings of the Ld. CIT(A) holding as under: 11. On interpreting the term consideration received as being at the time of issue of share s as held by us above, the valuation date for determining FMV is the date of issue of shares. Thus, a comparison of the fair market value of shares and the consideration received, both relating to the issue of shares is made and the surplus if any is subjected to tax. This is a reasonably sound and logical interpretation since the sect ion, subjects to tax the excess consideration received by over pricing the value of shares issued. Overpricing or excess consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f allotment of share s. In the case before us the terms and conditions of issue of shares were not set t led in the year of application for shares but on the contrary in the year of allotment since while the application had been made at a premium of Rs. 90/- the shares were al lot ted in the impugned year at a premium of Rs. 590/- . The said decision therefore is of no assistance to the assessee. The decision of the ITAT Chandigarh Bench in the case of Luxmi Foodgrains(supra) is also distinguishable on facts since in that case the dispute about the invocation of section 56(2) (viib) arose on account of the fact that the consideration received by way of cheques had not been enchased by the assessee at all and therefore he disputed the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. In the present case since the AO has passed the assessment order in accordance with the decision of the coordinate Bench rendered in the case discussed above, the same cannot be termed as erroneous within the meaning of section 263 of the Act. In our considered view since the order passed in the present case is in consonance with the findings of the coordinate Bench, the Ld. PCIT has wrongly exercised the revisionary powers u/s 263 and directed the AO to tax the amount excess of its fair market value under the head income from other sources on receipt basis. Hence, we hold that since the order passed by the A.O. is not erroneous, the Ld. PCIT has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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