9911796707
TMI Blog2024 (1) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... tax difference between sales consideration computed using Rs 178.12 per share as sale price and cost of acquisition as Long Term Capital Gain taxable @ 10% and remaining portion of sales consideration paid to the Appellant was treated as income from other sources and taxed @ 40% - HELD THAT:- Based on a reading of Section 50CA of the Act, it is clear that where the actual sale consideration on transfer of unlisted equity shares is less than the fair market value of such shares determined as per the NAV method, the actual sales consideration shall get substituted with the deemed sales consideration as determined in accordance with NAV method. In the facts of the Assessee, the unlisted equity shares held by the Assessee in the J.V. Company we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP has erred in considering the lull value of consideration at Rs. 39,54,26,400/- towards the sale of shares by ignoring an unambiguous language of the provisions of Section 48 of the Act relating to computation of capital gains. 1.2 On the facts and circumstances of the case and in law, Ld. AO/DRP has erred in their understanding that Section 50CA of the Act, read with Rule 11UAA of the Income-tax Rules, 1962 ( Rules ), provides an upper limit for the valuation of share price considered for computing capital gains under the Act. 1.3 On the facts and circumstances of the case and in law, Ld. AO/DRP has erred in charging income amounting to INR 12,18,33,600 to tax under Section 56(2)(x)(a) of the Act [without specifying the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head income from other sources , as per Article 21 of the India-Germany DTAA. 1.7 On the facts and circumstances of the case and in law, the Ld. AO/DRP has failed to consider the fact that as per Article 13 of the India-Germany DTAA, entire gains rising on the transfer of shares in India should be chargeable as capital gains income and no further restriction regarding the method of computation of such income has been specified therein unlike the Act. 1.8 On the facts and circumstances of the case and in law, the Ld. AO/DRP has erred in alleging that the fair market value of the same share of the same company on the same date cannot be valued at multiple prices, completely ignoring the fact that the difference in share pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Nilkamal Limited. The Joint Venture Company was called M/s Nilkamal Bito Storage Systems Private Limited ( J.V. Company ). The assessee sold 100% stake in the J.V. Company to Nilkamal Limited for a total consideration of Rs. 51,73,35,000/- at a value of Rs. 233/- per share. The assessee claimed the cost of acquisition amounting to Rs. 22,15,50,000/- and offered the difference of Rs. 29,57,85,000/- to Capital Gains tax as per the applicable provision of the Income-tax Act, 1961. 4. For the subject transaction, the Appellant had also obtained a Lower Deduction Certificate dated 22 August 2019. In the relevant assessment year, the Appellant had obtained two valuation reports for determining the FMV of the equity shares - i) Valuation rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. For the purposes of determining the value of the unquoted shares under Section 50CA / Rule 11UAA, a valuation report from M/S Jagdish V Rajgor Co, Chartered Accountants was obtained who determined the value @ Rs. 178.12 per share based on NAV method. The sale of above unquoted shares was effected at a negotiated price of Rs. 233 per share, which is more than minimum floor price under Section 50CA and within the ceiling price as per FEMA. The AO held that the value determined as per Rule 11UAA of the Rules, Rs. 178.12 per share shall be construed as selling price in the sale transaction between the Assessee and the buyer. Consequently, the AO held that the remaining portion of the sale consideration paid to the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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