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TMI Blog2023 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... see had factored in only Rs.90 per share as share premium component, the rest being the face value.Thus, total value of per share was Rs. 100 which was well below the value arrived at as per the valuation report. Given this position, the CIT(A), in our view, correctly observed that it was not a sham transaction contrary to conclusion arrived at by the AO. Whether Sub Rule (2) of Rule 11UA would be applicable even to those transactions which occurred prior to 29.11.2022? - We are in agreement that no such distinction could have been drawn. Once the amended rule kicked-in, it would apply to transactions which were carried out both before and after the amended Rule became operable. We may note in this particular case that the loans were converted into share capital after 29.11.2022.The conversion of loan to equity occurred pursuant to Board of Directors Resolution, passed on 06.03.2013. It is in this backdrop that the CIT(A) deleted the addition. The Tribunal via the impugned order sustained the deletion of the addition. Revenue said Tribunal lost sight of the fact that the addition was made under Section 68 of the Act and therefore, the discussion with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 90/- per share. 7.1 This issue was framed in the context of the fact that the respondent/assessee was incorporated on 05.12.2012 and that certain other investors, including those who had paid premium for shares to the respondent/assessee, had been allotted shares at the face value of Rs. 10/-. 8. We may note that the record also discloses that the respondent/assessee had received, in the form of loans/deposits, Rs. 4,52,00,000/-. These loans and deposits were received on 15.03.2013. 8.1 The respondent/assessee converted the aforementioned loans and deposits into share capital by allotting 4,64,000 shares out of which 10,000 shares were issued to the directors of the respondent/assessee and other persons at par while the remaining 4,54,000 shares were issued to the directors, other individuals and group companies at a premium of Rs. 90/- per share. 9. What is also not in dispute is that the loans and advances received by the respondent/assessee were utilised for purchasing a parcel of land located at village Rewla, Khanpur, Delhi for a consideration of Rs. 4,21,00,000/-. 10. Insofar as the aforesaid aspects are concerned, the Commissioner of Income Tax (Appeals) [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loys Pvt. Ltd. 3,500,000.00 07/12/2012 Payment of Registration Charges 422,200.00 07/12/2012 SA Alloys Pvt. Ltd. 3,000,000.00 08/12/2012 Purchase of Land 5,050,000.00 07/12/2012 SA Alloys Pvt. Ltd. 3,500,000.00 08/12/2012 Purchase of Land 5,050,000.00 07/12/2012 SA Alloys Pvt. Ltd. 3,500,000.00 08/12/2012 Purchase of Land 3,500,000.00 07/12/2012 Avia Auto Services Pvt. Ltd. 3,500,000.00 08/12/2012 Purchase of Land 3,500,000.00 07/12/2012 Sri Durga Automobiles 1,500,000.00 08/12/2012 Purchase of Land 3,500,000.00 07/12/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 18. The other aspect which the AO had flagged concerned valuation of the subject shares. 18.1 According to the AO, the share premium was arrived at in a collusive manner. It is in this context, the AO had sought copies of the valuation certificate from respondent/assessee s chartered accountant in terms of Rule 11UA of the Income Tax Rules, 1962 [in short, Rules ] with regard to share premium. 19. Furthermore, the AO also put the respondent/assessee to notice as to why the share premium received by it with respect to subject shares should not be treated as income in accordance with the provisions of the Section 56(2) read with Section 2(24) of the Act. 20. The CIT(A), in our view, correctly understood the said aspects of the matter. 21. We may also note that the AO had made an observation to the effect that share capital and share premium received prior to 29.11.2012 was not covered by Rule 11UA of the Act. This view was taken as said provision was inserted in the Rules only on 29.11.2012. 22. What is not contested is that the respondent/assessee did submit the valuation report concerning the subject shares. In valuing the subject shares, in particular, in ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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