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TMI Blog2024 (2) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... dian entities/concerns, hence it is a discrimination done by the Assessing Officer between residents and non- residents. Counsel stated that so far premium is concerned, the Indian Residents are entitled for similar treatment, however, assessing officer has failed to provide the similar treatment. We note that assessee-company worked out the premium, on the basis of Discounted Cash Flow Method, and in accordance with applicable Income Tax Rules. We have gone through the Valuation report prepared as per DCF method and noted that premium amount was worked out as per the norms mentioned in the Income Tax Rules and Discounted Cash Flow Method, therefore, we do not find any inconsistencies, hence we delete the addition. Excess claim of depreciation on plant and machinery - assert put to use for less than 180 days - HELD THAT:- The assessee claimed that trial production has started in August 2012 and claimed full depreciation. However, assessee failed to prove start of production by way of excise return for August 2012. This proves that production has not commenced from August but from March 2013 and assessee is entitled for depreciation for half year only. However, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee before us is a limited company and filed its return of income through electronically for assessment year 2014-15, showing loss of Rs. 1,83,48,394/- on 26.09.2013. The assessee`s case was selected for scrutiny and a notice u/s 143(2) was issued to the assessee on 02.09.2014. It was found from audited financial statements that during the year under consideration, assessee-company has issued 255108 equity shares at the face value of Rs. 10/- per equity share and assessee-company has charged premium of Rs. 440/- per equity shares. As per the details furnished by assessee, during the year, the assessee-company has issued equity share to following share applicants: Sr.No. Name of the share applicants No. of shares allotted Share capital Share premium Share application money 1 Shipchandler Energy Equipment LLC 177820 1778200 78240800 80019000 2 Kamilbhai Z Vasi 7763 77630 3415720 3493350 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are including facts and circumstances value at the rate of Rs. 10 per equity share. 3. On perusal of the submission filed by the assessee in connection with the issue of share application money, it is notice that assessee-company has charged premium at the rate of Rs. 440/- per equity shares. It means that assessee has charged premium which is more than the fair market value of the equity shares of the assessee company. As per the provision of section 56(viib) of the Act, where a company, not being a company in which the public are substantially interested, received, in any previous year, from any persons being a resident, any consideration for issue of shares that exceeds the face value of such shares, ethe aggregate consideration received for such shares as exceeds the fair market value of the shares may be treated as income from other sources. In the impugned case, assessee company has charged premium as high as Rs. 440/- per equity share, whereas the fair market value of the equity share excluding face value comes to Rs. 421.65 per equity share. In view of the above, the difference amount Rs. 18.35/- (440 421.65) on each equity shares issued during the year is to be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee and noted that out of 2,55,108 equity shares allotted by the assessee, the equity shares of 1,77,820 were allotted to Shipchandler Energy Equipment LLC, Dubai-based company, and balance shares were 77,288 ( 2,55,108- 1,77,820) were allotted to Indian entities/concerns therefore the provisions of section 56(viib) of the Act are applicable to Indian resident persons/entities. Therefore, assessing officer accepted the assessee s argument in respect of non-applicability of section 56(2)(viib) to non-resident investor viz. Shipehandler Energy Equipment LLC. However, the provisions of section 56(2)(viib) of the Act is applicable to resident investors. Thus, Assessing Officer held that the share application money received from the resident investors were subjected to the provision of section 56(2)(viib) of the Act, if the premium received exceeds the fair market value of the equity shares. Therefore, assessing officer made addition of Rs. 14,18,234/- (Rs. 18.35 x77,288) under section 56(2)(viib) of the Act. 7. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before NFAC/Ld. CIT(A), who has confirmed the addition made by Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the ld CIT(A) and other materials brought on record. We note that assessee submitted fair market value dated 30.11.2015 of equity shares of the assessee-company, which worked out, on the basis of Discounted Cash Flow Method, and as per DCFM, the fair market value of the equity shares of the assessee-company is Rs. 431.65 per equity share, which was accepted by the assessing officer in case of non-residents, in respect of the equity shares of 1,77,820, which were allotted to Shipchandler Energy Equipment LLC, Dubai-based company. However, the premium amount was not accepted in case of balance shares of 77,288 (2,55,108- 1,77,820), which were allotted to Indian entities/concerns, hence it is a discrimination done by the Assessing Officer between residents and non- residents. The ld Counsel stated that so far premium is concerned, the Indian Residents are entitled for similar treatment, however, assessing officer has failed to provide the similar treatment. 12. We note that assessee-company worked out the premium, on the basis of Discounted Cash Flow Method, and in accordance with applicable Income Tax Rules. We have gone through the Valuation report prepared as per DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in appeal before us. 19. Learned Counsel argued that main plant of the company was ready with basic installation in the month of August, 2012, hence depreciation should be allowed for full year. 20. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 21. We have heard both the parties. We note that the ground raised by the assessee relates to excess claim of depreciation on plant and machinery. The assessee claimed that trial production has started in August 2012 and claimed full depreciation. However, assessee failed to prove start of production by way of excise return for August 2012. This proves that production has not commenced from August but from March 2013 and assessee is entitled for depreciation for half year only. However, we are of the view that one more opportunity should be given to the assessee to plead his case before Assessing Officer, therefore we remit this issue back to the file of the assessing officer with the direction to produce excise records and to explain put to use of fixed assets, with ..... 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