9911796707
TMI Blog2021 (12) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Rule 11UA of the Income Tax Rules, 1962 and works out of Rs. 3.70 per share. 3. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal." 2. Brief facts as culled out from the records are that the assessee is a Private Limited Company engaged in the business of the Trading of Automobiles. The assessee has filed e-return of income on 30.11.2014 declaring total loss of Rs. 1,30,87,324/-. Case was selected for limited scrutiny through CASS for following two reasons: 1. Large share premium received during the year 2. Mismatch in sales turnover reported in Audit Report and ITR Notices u/s 143(2) and 142(1) of the Ace were duly served upon the assessee on 01.09.2015. Further notice u/s 142(1) of the Act along with questionnaires was duly served upon the assessee on 26.04.2016. In response to above Ld. counsel for the assessee appeared on different dates and filed written submission and produced the books of account, ledger and requisite documents etc. which were test checked. The assessee company has introduced share capital and share premium amounting to Rs. 2,10,000/- and Rs. 2,70,90,000/- respectively. The assessee was asked to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de its order dated 21.01.2020 deleted said addition made, accepting the submissions put forth by the assessee during the appeal proceedings. * Section 56(2)(viib) applies when FMV of share is less than total consideration received. For determining FMV of share, the section provides an Explanation which stipulates the following methods - EXPLANATION a (i) of Section 56(2)(viib) -Prescribed Method Under Rule 11UA (AT THE OPTION OF THE ASSESSEE) * * Net asset Method (As per the Formula) or * Discounted Cash Flow Method OR * EXPLANATION a (ii) of Section 56(2)(viib) - Value of assets on the date of issue of share as may be substantiated to the satisfaction of Assessing Officer * Whichever is Higher * During the assessment proceedings, the assessee submitted that Fair market value of shares is higher than the consideration received & thereby section 56(2)(viib) is not applicable. Kindly refer Page no. 32 of the paper book where valuation sheet was given by the assessee. * This valuation sheet was based on Net asset Value as per balance sheet of 31.03.2013 & adjusted with market value of land situated at 309/4, 310/4, Gram Khajrana, Bypass Road, Indore having are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hidden assets irrespective of the fact that they are not included in the books of accounts but ignored the market valuation of land as not revised in the books of accounts. 2. Difference in Plot value on comparison of Guideline value and Valuer Report - A. The assessee had relied on the valuation report of the land in Gram Khajrana to substantiate the value of shares. The valuer is an expert and Property valuation depends upon many factors which an expert considers and then come to his conclusion. Also, the valuation was conducted by bank empaneled valuer for the purpose of granting loan to assessee due to which it has high credibility. (Kindly refer Page no. 102-106 of the Paper book) B. Without prejudice to the above contention and in alternate, the assessee had established through various evidences submitted during appeal proceedings that even if Guideline value of land is considered than also the valuation of land is very high. C. Even the Ld. AO in its remand report, admitted the same fact of high market valuation of land but further mentioned that the same is not a relevant evidence which is against the provisions of section 56(2)(viib). (Kindly refer to page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares shall be the value as may be substantiated by the company to the satisfaction of the AO based on the value on the date of issue of shares of its assets, including tangible assets being goodwill, know-how, patents, copyrights, trademarks, licenses, franchise or any other business or commercial rights of similar value. In accordance with the above, the appellant has valued the shares on the basis of valuation of land at the time of issue of shares. The existence of plot measuring 60040 sq.ft. has not been disputed. The location of plot on bypass road (NH-3) and diverted for commercial purpose has also not been denied by the AO. It has also not been disputed by the AO that impugned land was of very high value. Rather, in his report dated 01/07/2019, at para no. 2, the AO has reported that on the basis of additional documents so filed, it appeared that the impugned land was having very high market valuation. The AO has also not disputed the guideline value of the area being Rs. 7000/- per sq. mtr. or Rs. 650.56 per sq. ft. It is also not disputed by the AO that the plot is situated on NH-3, bypass road as such the guideline value as per the notification for F.Y. 201314 was suppos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stated as is evident from Page no. 33-34 of the paper book. It seems that the Ld. AO misapplied the provisions of section 56(2)(viib) by only considering Rule 11UA (book value of Net asset option) to determine FMV of the shares while the Explanation (a)(ii) also gives an option to the assessee to substantiate the value of shares based on market value of its tangible and intangible assets. Section 56(2)(viib) and Explanation thereof reads as under: Section 56(2)(viib)- any immovable property- (i) Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration. ............................ Explanation - For the purpose of this clause - (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, kno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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