9911796707
TMI Blog2022 (12) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... cts not taking into consideration. The liability disclosed in the balance sheet as noted above while valuing the FMV of the shares of both the companies has to be reduced and accordingly, CIT (A) has rightly deleted the additions made by the AO. Therefore, the order of Ld. CIT(A) is confirmed and the addition is directed to be deleted. Appeal filed by the revenue stands dismissed. - I.T.A. No.4266/Mum/2017 - - - Dated:- 19-9-2022 - SHR AMIT SHUKLA, JM AND SHRI S. RIFAUR RAHMAN, AM Appellant by Shri. Nimesh Yadav Respondent by Shri. A.K.Ghosh , Pooja Ramder O R D E R Per Amit Shukla, Judicial Member: The aforesaid appeal has been filed by the revenue against order dated 30.03.2017, passed by CIT (Appeals)-20 Mumbai for the quantum of assessment passed u/s 143(3) for AY 2011-12. The revenue has raised the following grounds:- 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.12,74,34,70,000/-u/s. 56 (2) (viia) of the Act made by the Assessing Officer being the difference in the consideration paid towards receipt of the shares of M/s. D.B. Projects Pvt. Ltd. and M/s. SLS Energy Pvt. Ltd. by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Preferential share 999 999 8 Fair Market Value of share as on 31.03.2010 as worked out U/r. llUA of IT Rules 1962. 8,832 9,856 9 Difference between Fair Market Value and purchase price of Equity share per share 8,822 9,846 10 Difference between Fair Market Value and purchase price of Preference share per share 7,843 8,856 Accordingly, the AO issued the show cause notice to make proposed additions u/s 56(2)(viia). 3. In response, assessee had filed a detail reply before the AO which has been incorporated at page 4 to 12 of the assessment order. In sum and substance, the assessee s contention was that firstly, the provision of section 56(2)(viia) does not apply to other allotment of equity /preference shares; secondly, the equity shares in SLS and DBPPL were acquired by the assessee company on 30th July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structure Pvt Ltd at Premium. Board Resolution dated 13/7/2010 3 30-7-10 Purchase of 10,000 Equity Shares by Mystical from Dynamix Balwas Infrastructure Pvt Ltd. Demat Statement Share Certificate 5. Ld. AO himself acknowledged that the shares were allotted to both the companies on 09/07/10. On the issue of valuation date, Ld. AO has made following observations:- As regards the Valuation Date the assessee placed reliance on Rule 11U(b) of IT rules 1962. A perusal of the said rule shows that the sub-clause (b) defines the balance sheet for the purpose of valuation of the shares as per the companies act. The said rule nowhere specifies the 'valuation date' as a particular date as claimed by the assessee in this case being 30.07.2010. The fair market value of the property being share as specified under section 56(2)(vii)(viiia) of the IT act is always has to be determined with reference to the date of allotment of share and not the purchase of the share by the recipient. In this instant case the date of receipt of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re capital of two group companies i.e. D B Projects Pvt. Ltd. and SLS Energy Pvt. Ltd. on 09.07.2010. It is noted the appellant has submitted the valuation of shares as on 09.07.2017 to be Rs. 10/share after taking into account the liability outstanding in the books of the investee companies towards the redemption of the premium on preference shares outstanding in their books of accounts. The AO had not accepted this valuation and had proceeded to make addition of Rs.12,74,34,70,000 M/s 56(2)(viiia). It is noted that the computation of Fair Market Value of shares of D B Projects Pvt. Ltd. and SLS Energy Pvt. Ltd. done by Assessing Officer is found not to be in confirmation with Rule 11U 11UA since the liability or account of the redemption of preference shares standing in the books of these investee companies was not considered by the AO while arriving at the fair market value of the share of investee companies as on the date of investment made by the appellant. It is not a case of the AO that the appellant was transacting in the shares at different rates and that this arrangement had been done to defraud the revenue its taxes by transacting at abnormally low prices. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which involves is, whether the valuation was done by the AO is in accordance with rule 11U and rule 11UA or not. The AO in his detail order has nowhere made any whisper about liabilities outstanding in the balance sheet as on 09.07.10 which is the date on which shares were transferred/ allotted. Rule 11U clearly provides that Valuation Date means, the date on which property or consideration, as the case may be, received by the assessee. Here in this case, the valuation date is to be reckoned on the date on which shares were allotted. The assessee had subscribed to the share capital of its two companies D. B. Project Pvt. Ltd. and SLS Energy Pvt. Ltd. on 09.07.10 and it was submitted that the valuation of the shares as on 09.07.10 as per NAV worked out to Rs. 10 per share after taking into account the liability outstanding in the books of the investee company. The balance sheet as on 09.07.10 in the case of D. B. Projects Pvt. Ltd. and SLS Energy Pvt. Ltd. are as under:- D. B. Projects LIABILITIES Amount (Rs.) Amount (Rs.) ASSETS Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frastructure Private Limited on account of premium on redemption of (DBffL) 7,700,000.00 6,800,000.00 14500,000.00 48,500,000.00 6,793,188,970.00 FIXED ASSETS Pre Operating Expenses Fending Capitalization CURRENT ASSETS Deposits .cans Advances Cash-In-Hand Bank Accounts 9,236,895.78 40,000,000.00 6,806,800,000.00 9,236,895 6,846,800,000 152,074.22 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
