9911796707
TMI Blog2023 (6) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... rrived at Rs. 1136.92 and Rs. 992 per share by Chartered Accountant namely Sh. A.K. Agarwal and Sh. Deepak Kumar Agarwal respectively. Assessee had ultimately issued shares to the aforesaid five share holders at a price below the fair market value of shares determined by the valuers in the valuation report. Obviously, the fair market value determined in the valuation report by the valuers represent the maximum value beyond which the shares could not be issued by any company. Hence, we do not find any justification in the action of the lower authorities in dismissing the DCF method of valuation and substitute it with any of the method of valuation and making addition u/s 56(2)(viib) of the Act. Issue in hand is squarely covered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has raised sole ground of appeal: 1. In the facts and circumstances of the case the Ld. A.O. has erred in law in making addition of Rs. 48,45,000/- U/s 56(2)(viib) of the Income Tax Act, 1961 ignoring the fact that the Share Application money pending allotment was received in F.Y.2010-11, which ought to be deleted and CIT(A) also in error in confirming the same. 2. That the assessee has right to add, modify or delete any ground during the appeal proceeding. 3. The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in confirming the addition made u/s 56(2)(viib) of the Act in the sum of Rs. 48,45,000/- in respect of share capital and premium received by the assessee. 4. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Furnish share application form, proof of allotment of shares and copy of resolution passed in AGM. (iii) Explain motive/justification on issue of share at high premium. (iv) Furnish calculation of share premium. (v) Please explain as to why consideration received in excess of fair market value for issue of shares in view of provision u/s 56(2)(vii)(b) of I.T. Act. 1961 be not treated income from other sources. 5. In response to the said query, the assessee filed reply vide submission dated 15/02/2016 with the stating that the Fair Market Value ( FMV ) of the share at the time of issue of share was Rs. 1136.92 per share and that the company had issued the shares at a price less than fair market value. In support of these, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is upheld by the Ld. CIT(A). 7. It is not in dispute that the assessee had furnished the name of the share holders, address of the share holders, amount received from the share holders together with their PAN. The assessee has also furnished the bank accounts of the share holders, copy of income tax returns and copy of capital account of share holders duly explaining the sources for making investment in share capital and share premium with the assessee company. The assessee has furnished during the course of assessment proceedings, valuation report from independent Chartered Accountant, Mr. Deepak Agarwal vide valuation report dated 22/02/2013, who had valued the shares using DCF method at Rs. 992 per share to be the fair market value. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation and substitute it with any of the method of valuation and making addition u/s 56(2)(viib) of the Act. 8. Further, we find that the issue in hand is squarely covered by the decision of this Tribunal in the case of Cinestaan Entertainment (P.) Ltd. vs. ITO reported in 106 taxmann.com 300 (Delhi-Trib.) wherein it was held as per section 56(2)(viib) of the Act read with Rule 11U and 11UA of the Rules, the assessee has an option to do valuation of shares and determine fair market value either using DCF method or NAV method and Assessing Officer cannot examine or substitute his own value in place of value determined. Further, it was also held that the Revenue cannot sit in armchair of businessman to decide what is profitable and how b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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