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TMI Blog2022 (12) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ck for a consideration less than the book value, the assessee has earned hidden asset from the parent company by giving up its right to obtain the true value of its shares transferred, we do not agree because the provisions of section 2(22)(d) r.w.s.115O of the Act would not apply in the hands of the assessee, since the shareholders have received the money in lieu of buyback of shares by assessee of the parent company. According to us, said provision would not apply in the hands of the assessee who has brought back this shares and in any eventuality, the very provision of section 2(22)(d) of the Act also craved out exception i.e., dividend . In our view, the assessee has not received any property being shares in a company and once, there is no property of recipient company it should be share of any other company and could not be its own share, because any share cannot become property of recipient company on buyback. In the given facts and as arguments made the assessee has earned hidden asset, we do not agree that on the issue of buyback of shares, assessee has acquired any share of any other company which would become property of the recipient company. Actually it will be reductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id commission. The assessee also filed agreements, details of service rendered, payment made in regard to each sale i.e., calculation of commission based on invoices of sales. Even now before us, the ld. Senior DR could not controvert the above stated fact. Hence, we confirm the order of CIT(A) deleting the disallowance. Therefore, this issue of Revenue's appeal is dismissed. 5. The second issue in this appeal of Revenue is as regard to the order of CIT(A) deleting the addition made by AO on the basis of taking fair market value of buy back of shares by assessee from its holding company M/s. Advance Lighting Technology Inc, a company incorporated in USA, as valued by assessee at Rs.89/- per share as against fair market value adopted by AO at Rs.115.59 per share by invoking the provisions of section 56(2)(viia) of the Act. 6. The brief facts are that the assessee company has brought back shares from its holding company M/s. Advance Lighting Technology Inc., during the year ending 31.03.2011 numbering 15,56,500 shares of Rs.10/- each i.e., face value, out of total shares of 19,38,71,760 at a price of Rs.89/- per share amounting to Rs.13,85,28,500/-. According to AO, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the giver as to whether it is parent company or Sister Company or altogether external person. The wording of the act is '…from any person or persons....". Further, share is a share. It can be of any external company or of one's own. A share once issued to another person does not give an automatic lean to the issuing company a right to get it back. It is the discretion of the holder of such share to sell whether to a totally different person or to the person from whom it had originally purchased/obtained. He further submitted that secondly, the provisions of the section do not speak whether the transaction has to be a 'purchase', The wording of the act is "...receives...". The word 'receive' could include through purchase/buyback/redemption or in any form one may obtain. The provision does not exclude receiving one's own share. Meaning to terminologies which the law has not factored cannot be introduced or attributed to exclude transaction from the purview of the law which the law in the first instance has not factored through some explanation or through exclusion provisions. This aspect is very evident from the sub-clause itself by legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares of a company is also not fulfilled in the context of buy-back of shares since the shares of the assessee's own case by no stretch of imagination be treated as property in its own hands. Hence, both the pre-requisite conditions contemplated in Section 56(2) (viia) of the Act is not attracted thereby fortifying the factual findings rendered by the First Appellate Authority in the impugned order. He also argued that there cannot be any asset accretion in the hands of the company arising out of the buy-back of its own shares since the adjustment would be effected only between its share capital and reserves and surplus. The benefit/gain if any out of the buy-back of shares would arise only in the hands of the shareholder and not in the hands of the company. In any event, the reduced share capital after buy-back would still be shown as a liability in the hands of the Assessee as per the prescription of law as per the Schedule III of Companies Act, 1956thereby negating the presumption of accretion of asset / hidden asset in the hands of the company while if any such accretion would only benefit the shareholders and not the Assessee company.In order to bring the said gain/benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be its own share, because any share cannot become property of recipient company on buyback. Exactly identical view is taken by the Co-ordinate Bench of this Tribunal in the case of Vora Financial Services (P) Ltd., supra, wherein the Tribunal held in para 30 to 32 as under:- 30. We have heard rival contentions on this issue and perused the record. The provisions of sec. 56(2)(viia) reads that "where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010, any property, being shares of a company not being a company in which the public are substantially interested" The words "firm or a company""any property, being shares of a company" are important here. In this regard, we may refer to the Memorandum explaining the insertion of Provisions of sec. 56(2)(viia) by the Finance Act, 2010, which reads as under:- "Under the existing provisions of section 56(2)(vii), any sum of money or any property in kind which is received without consideration or for M/s. Vora Financial Services P. Ltd. inadequate consideration (in e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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