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TMI Blog2022 (7) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, held that the provisions of Section 56(2)(viib) of the Act could not be attracted on the share application money received in the FY 2010-11 i.e. prior to the insertion of the said provision and deleted the impugned addition made by the A.O. Before us, no fallacy in the findings of CIT(A) has been pointed-out by the Revenue. In such a situation, we find no reason to interfere with the order of the CIT(A). We, therefore, confirm the order of the Ld. CIT(A) on this issue and dismiss Ground of appeal No.1 of the appeal of the Revenue. - ITA.No.960/Del./2020 - - - Dated:- 19-7-2022 - Shri Anil Chaturvedi, Accountant Member And Ms. Astha Chandra, Judicial Member For the Assessee : Sh Vinod Kumar Bindal, C.A. And Ms. Rinky Sharma, ITP For the Revenue : Ms. Sunita Singh, CIT-DR ORDER PER ANIL CHATURVEDI, A.M. : This appeal has been filed by the Revenue against the order of the Ld. CIT(A)-8, New Delhi, dated 06.12.2019 vide Appeal No.10274/18-19, for the A.Y. 2016-17. 2. Briefly stated facts of the case are that the assessee is a company stated to be engaged in the business of broadcasting and telecast of TV channel. The assessee filed its return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide order dated 06.12.2019 decided the issue in favour of the assessee by observing as under : 5. Decision : I have perused the assessment order, submissions of the appellant and evidences placed on record and facts of the case. The facts of the case are that the appellant received share application money of Rs.15 Crores from SKF in the FY 2010-11 out of which Rs.4.25 crores was refunded and 4,720 equity shares were issued for @ Rs.22,775/- per share aggregating to Rs.10,75,00,000/-.The assessing officer computed the fair market value of the share at Rs. 10/- each as per 'net asset value' method. Since the shares were issued at a value more than the fair market value, the assessing officer made an addition of Rs.10,74,52,800/- u/s 56(2)(viib) of the Act. 5.1. The appellant submitted that that MH1 was operating three channels including a devotional channel namely MH1 Shraddha. SKF wanted to invest in the said channel. Therefore the appellant company was incorporated on 02/07/2010 as a special purpose vehicle by Bathla family, promoters of MH1, who held 10,000 shares of the appellant company. A tri-partite agreement dated 03/11/2010 was entered into between MH1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant and the shares were allotted in the FY 2015-16 as per the joint venture agreement. The appellant also placed the balance sheet of the appellant where the shareholding of SKF was duly disclosed in the notes to account. 5.4. The appellant submitted that the section 56(2)(viib) of the Act is attracted when the issuance of shares and receipt of consideration for the same happen in the same financial year. This is a deeming provision which taxes the capital receipts only under certain defined situation and should be strictly interpreted and the appellant relied on number of authorities in this regard. Since in this case, the share application money was received in FY 2010-11 and shares were issued in FY2015-16, provisions of section56(2)(viib) of the Act are not attracted. 5.5. The appellant submitted that provisions of section 56(2)(viib) were not in the statute when the share application money was received by the appellant in FY 2010-11 and thus the provisions of section 56(2)(viib) cannot be attracted by relying on the ITAT decision in the case of ACIT Vs M/s Diach Chemical Pigments (P) Ltd. ITA no.546/Kol/2017 for the AY 2013-14 pronounced on 19/06/2019wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in the balance sheet of the appellant. 5.9. I agree with the contention of the appellant that the value of 32% shareholding of the appellant company (32,000 shares out of total 1,00,000 shares) was computed to be Rs. 15 crores in the FY 2010-11 and the said amount was also received by the appellant in FY 2010-11. Undisputedly, the paid up share capital of the appellant remained 10,000 shares till FY 2015- 16. Considering the same as 68% shares, 4,720 shares were issued to SKF to maintain its 32% shareholding in the total shareholding of 14,720 shares. 5.10 In view of the above facts, the percentage of shareholding and total sale consideration for the same was pre-determined by the agreement but the consideration per share changed only because the number of shares allotted to SKF got changed considering the total number of issued shares of the appellant. 5.11. I find force in the contention of the appellant that the provisions of section 56(2)(viib) of the Act were introduced in the Act w.e.f. AY 2013- 14 and therefore the same cannot be applied to the share application money received in the FY 2010-11 as has been held in the case of Diach Chemical Pigmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal as the same were required to be obtained u/r 11UA r.w. section 56(2)(viib) of the Act. Since in this case, the provisions of section 56(2)(viib) are not applicable as the share application money was received in the FY 2010- 11, these reports obtained u/r 11UA are not at all required for deciding the issue at hand. 5.14. Since there was no provision of section 56(2)(viib) in statute at the time of receiving the share application money in FY 2010-11 when both the shareholding and consideration of shares was ascertained, the said provision cannot be applied in any manner and no addition can be made invoking the said provision. 5.15. In view of the above facts and position of law, I am of the view that section 56(2)(viib) of the Act cannot be applied on the share application money received in the FY 2010-11 i.e. prior to the insertion of the said provision. In view of the above facts, section 56(2)(viib) could not be attracted in any manner and the addition is hereby deleted. 5. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before us. Before us the Ld. D.R. supported the order of the A.O. 6. The Learned Counsel for the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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