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TMI Blog2021 (4) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... t which is in excess of its FMV as income from other sources on receipt basis, is contrary to the findings of the coordinate Bench. As per the settled law, the jurisdiction u/s 263 of the Act can be exercised on satisfaction of twin conditions 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 revision 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 wrongly set aside the same by exercising jurisdiction u/s 263. Appeal of the assessee is allowed. - ITA Nos. 658/CHD/2018 (Assessment Year : 2013-14) - - - Dated:- 24-2-2021 - SHRI N.K. SAINI, VICE PRESID ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the order passed by the learned Principal Commissioner of Income Tax (Central) {PCIT(C)} is bad both in the eye of law and on facts. 2 On the facts and circumstances of the case, the order passed by the learned PCIT cancelling the assessment order passed by the A O . is untenable in the absence of order of the A O . being erroneous as well as prejudicial to the interest 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 of the case, the learned PCIT(C)has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Fred Enterprises Pvt. Ltd.(supra) relied upon by the ld. Counsel for the assessee. The only issue which requires adjudication in this case is whether the impugned order passed by the ld. PCIT is bad in law in the absence of order of the AO being erroneous as well as prejudicial to the interest of the revenue. As pointed out by the ld. Counsel, in the case of ITO Vs. M/s Fred Enterprises Pvt. Ltd.(supra), A.O. computed the FMV of shares in accordance with Rule 11(U)(b) of the Income Tax Rules, 1962 on the date of issue of shares holding that as per Explanation 2 of Section 56(2) (viib) the FMV of share shall be the value on the date of issue of share and added the same to the income of the assessee under the head income from other sources. 8. The assessee challenged the assessment order before the Ld. CIT(A) inter alia on the ground that the AO has invoked section 52(2) (viib) on the receipt of consideration against issue of shares since the assessee had not received amount in the impugned year but in the earlier year no addition could be. 9. Ld. CIT(A) after hearing the assessee deleted the addition made by the A.O. holding that the section 52(2) (viib) was invoked in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotment 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 ₹ 90/- the shares were al lot ted in the impugned year at a premium of ₹ 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 applicability of these ct ion on the g round of receipt of consideration. There was no dispute about consideration having arisen in that case, which distinguishes it from the present case. Thus, reading the provisions of the Sect ion and the Rules pre scribed for determining the Fai r Market Value of shares, what is arrived i s that the provisions of Sect ion 56(2) (viib) are triggered in the year of issue/allotment of shares. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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