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TMI Blog2023 (1) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... ark Anthony De Boer, was a non-resident and therefore both the AO as well as CIT(A) accepted that provision of section 56(2)(viib) of the Act is not applicable in respect of shares allotted to a non-resident. In respect of the other 4 individuals to whom shares allotted by the assessee in excess of the price determined by the valuation report were held to be covered within the ambit of section 56(2)(viib) of the Act. As per the provisions of section 56(2)(viib) in the case of a company, in which the public is not substantially interested, receipts from any person being a resident as a consideration for the issue of shares in excess of the face market value of such shares is to be considered as the income of the assessee under the head i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d based on the material available on record. 3. In this appeal, the assessee has raised the following grounds: 1. The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the addition of Rs. 25,96,000/- u/s. 56(2)(viib) of the Income Tax Act. 2. The learned CIT (Appeals) has erred in law and on the facts of the case in enhancing the income of the assessee company by Rs. 59,14,750/- u/s. 56(2)(viib) of the Income Tax Act. 3. The assessee craves leave to add, alter or amend the above grounds of appeal. 4. The only grievance of the assessee is against the addition made under section 56(2)(viib) of the Act on account of excess consideration received on allotment of shares. 5. The brief fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered while invoking the provisions of section 56(2)(viib) of the Act in the assessment order. Accordingly, the learned CIT(A) issued notice for enhancement under section 251(2) of the Act. After considering the submissions of the assessee, the learned CIT(A) vide impugned order held that insofar as allotment of shares to non-resident person is concerned, section 56(2)(viib) of the Act is not applicable, however, in respect of other 4 individuals, including the promoter director of the assessee, section 56(2)(viib) of the Act is applicable to the allotment of shares at Rs.400, which is more than the value determined by the valuation report. Accordingly, the learned CIT(A) held that issuing of shares totaling to 1,00,250, by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,06,911 9. In the present case, as is evident from the record, there is no dispute regarding the fact that the fair market value of the shares arrived on the basis of the valuation report dated 15/09/2012 by using the DCF method was Rs.341 per share. Out of the aforesaid 5 individuals to whom the shares were allotted by the assessee, one person viz. Mr. Mark Anthony De Boer, was a non-resident and therefore both the AO as well as the learned CIT(A) accepted that provision of section 56(2)(viib) of the Act is not applicable in respect of shares allotted to a non-resident. In respect of the other 4 individuals to whom shares allotted by the assessee in excess of the price determined by the valuation report were held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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