9911796707
TMI Blog2023 (8) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... computed by the AO as against the capital loss declared by the assessee. 2. The facts relating to the issue are discussed in brief. The assessee herein is a Singapore company. It acquired an Indian company named M/s Groupon India P Ltd from M/s Groupon Holdings B V in India on 31.07.2015 by purchasing 2,62,237 shares having face value of Rs.10/- each at Rs.5,774/- per share. Subsequently, the name of above said company was changed into M/s Nearbuy India P Ltd. The above said subsidiary company was engaged in the business of developing local e-commerce market place that would connect merchants with customers who require services and goods offered by those merchants at a discount price to the customers. The above said subsidiary would earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares at Rs.14,361/- per share. The assessee submitted that the sale value of shares has been determined on the basis of valuation report obtained by it from M/s Finshore Management Services limited, who had valued the shares under Discounted Cash Flow (DCF) method and arrived at the value of Rs.7,094/- per share. It was further submitted that the Fair market value of shares is required to be determined as per Rule 11UAA of Income tax Rules, only when the sale consideration received or accruing to the assessee is less than the Fair market value. It was submitted that the above said subsidiary company was continuously making losses. Hence the Fair Market value determined under the above said rule (Net asset method) has worked out at a negati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income of the assessee at Rs.225,85,83,818/-, being the cumulative value of both the capital gains stated above. 6. The Ld DRP concurred with the view taken by the AO in the draft assessment order and accordingly rejected the objections filed by the assessee. In view of the same, the AO passed the final assessment order determining the total income at Rs.225,85,83,818/-, as initially determined in the draft assessment order. The assessee is aggrieved by the addition so made by the AO. 7. The ld A.R submitted that the Capital gain is computed in accordance with the provisions of sec. 48 of the Act, where the "full value of consideration" received or accruing as a result of transfer of Capital asset is required to be taken into acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 622)(SC), wherein it was held that the expression "full consideration" in sec. 12B(2) of 1922 Act cannot be construed as having a reference to market value of asset transferred but expression only means full value of thing received by transferor in exchange for capital asset transferred by him. (b) CIT vs. M/s B Arunkumar & Co (ITA No.2337 of 2013 dated 8th March, 2016)(Bom), wherein the Hon'ble Bombay High Court upheld the view expressed by the Tribunal that where a transfer of a capital asset takes place by sale on receipt of a price, then the consideration fixed/bargained for by the parties should be accepted for the purpose of computing capital gains. It cannot be replaced by the market value or a notional value. The Tribunal, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced in support of the said information. Hence the value arrived at under Rule 11UAA and the valuation report was rightly rejected by the AO. He submitted that the Tribunal may restore the matter back to the file of AO for examining the FMV again as done in the case of M/s Town Essential P Ltd vs. CIT (ITA No.139/Bang/2020 dated 30-06-2021). 11. In the rejoinder, the Ld A.R submitted that there is no much improvement in the book value of shares between 31.3.2017 and 31.3.2018. He submitted that the book value of share was negative figure, while the value arrived at under DCF method is 13 times more than the book value. Accordingly, he submitted that there is no proper reason to disbelieve the "full value of consideration" declared by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was not arrived by the AO under 11UA method. The case laws relied upon by the assessee supports the above said view point. We notice that the decision relied upon by Ld D.R, viz., M/s Town Essential Private Ltd is related to the provisions of sec.56(2)(viib) of Income tax Act and it only lays that the AO is not justified in tinkering with the methodology adopted by the assessee for valuing shares. Hence the said case law does not apply to the facts of the present case. 14. We agree with the above said contentions of the assessee. The Full value of consideration received by the assessee is Rs.7,094/- per share, while the value of share arrived under Net Asset Value method was (-)Rs.630.29. Since the full value of consideration received ..... X X X X Extracts X X X X X X X X Extracts X X X X
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