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TMI Blog2022 (11) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the AO as used in clause (a)(ii) of Explanation to section 52(b)(viib) does not speak of any subjective satisfaction but has to be considered objectively, keeping in view the value of the assets on the date of issue of shares. Assessee has proved that the value of the asset, i.e., the land at Delhi as per circle rate is more than Rs. 26.75 crores determined by the registered valuer. That being the factual position emerging on record, allotment of shares at Rs. 1,500/- per share must be considered to be the FMV on the date of sale and not high and excessive compared to the FMV. Assessee had entered into similar transaction with its holding company in assessment year 2014-15 wherein, shares having face value of Rs. 100 per share were all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer called upon the assessee to justify the share premium of Rs. 1,400/- per share and to further explain, why the share premium received being in excess of the Fair Market Value (FMV) of shares as on date of sale, should not be treated as income of the assessee under section 56(2)(viib) of the Act. In response to the query raised, the assessee submitted that as per section 56(2)(viib) read with rule 11UA, the fair market value of share can be either as per rule 11UA or on the basis of face value of asset, including, intangibles, whichever is higher. In support of such claim, the assessee furnished a valuation report of a registered valuer to justify the FMV of share, wherein, the registered valuer has valued the FMV of share by ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax avoidance or converting unaccounted money to accounted money, then the provision cannot be attracted to make any addition or disallowance. In this context, learned counsel drew my attention to the speech of Hon'ble Finance Minister while introducing the Finance Bill, 2012, wherein section 56(2)(viib) was brought into the statute for the first time. He submitted, in the present case, the shares were allotted to the holding company and not to any outsider from whom any unaccounted money could have flown to the assessee. He submitted, section 56(2)(viib) of the Act being a deeming provision has to be construed keeping in mind the purpose and object for which the provision was made. He submitted, it is not the case of the Revenue that hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- by applying the circle rate prescribed by State Government for stamp duty purpose. He submitted, while dealing with the issue of identical addition made in assessment year 2014-15, learned first appellate authority deleted the addition, being convinced with the fact that the FMV of shares as determined by the assessee for allotment to holding company is correct. He submitted, assessee's case is factually identical in the impugned assessment year, as well. Thus, he submitted, the addition made should be deleted. 7. Per contra, learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 8. I have considered rival submissions in the light of the decisions reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emium can only benefit either the holding company or the subsidiary and no third party is involved. In such a scenario, logically, no addition can be made under section 56(2)(viib) of the Act. For arriving at such conclusion, I draw support from the decisions of the Tribunal in the case of ACIT Vs. Y. Venkannachaudhary (supra) and Vaani Estates Pvt. Ltd. Vs. ITO (supra). 10. Even otherwise also, it requires consideration, whether the FMV of the shares allotted by the assessee can be taken at Rs. 1,500/- per share as per the assessee or Rs. 1082 per share as determined by the Assessing Officer. Undisputedly, the assessee has got the FMV of the shares valued through a registered valuer. As per the said valuation report, the registered valuer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided under the Statute. The expression "substantiated by the company to the satisfaction of the Assessing Officer" as used in clause (a)(ii) of Explanation to section 52(b)(viib) does not speak of any subjective satisfaction but has to be considered objectively, keeping in view the value of the assets on the date of issue of shares. In the facts of the present case, the assessee has proved that the value of the asset, i.e., the land at Delhi as per circle rate is more than Rs. 26.75 crores determined by the registered valuer. That being the factual position emerging on record, allotment of shares at Rs. 1,500/- per share must be considered to be the FMV on the date of sale and not high and excessive compared to the FMV. It is relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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