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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 ..... d in facts, in disallowing claim of depreciation of Rs. 44,39,156/- and hence Your appellant PRAYS that the same be deleted. 3. The Ld.A.O has not brought any such material warranting or justifying the extension of time limit and as such the impugned order is barred by the Limitation provided in section 153 and to that extent the impugned order is bad in law and deserves to be set aside." 3. First, we take up Ground No.1 which relates to addition of Rs. 14,18,234/- on account of share premium. 4. Brief facts qua the issue are that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 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 treated as income from other sources. Accordingly, you are show cause as to why the sum of Rs. 46,81,232/- should be added u/s 56(viib) of the Act." 5. The assessee-company vide letter dated 26.12.2016, has stated that addition u/s 56(viib) of the Act does not warrant in the present case for two r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 Assessing Officer. The ld CIT(A) noted that assessee received share capital from an entity based on Dubai which was treated as non-resident by Assessing Officer and rightly allowed the premium received on that capital. However, other 6 individuals who contributed to capital were Indian residents and liable to provision of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 DCF method, which is placed on paper book page No.30 to 51 of the assessee`s paper book 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 of Rs. 14,18,234/-. 13. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 documentary evidences. The Assessing Officer is also directed to examine the relevant documents and adjudicate the issue in accordance with law. 22. In the result, ground No.2 raised by the assessee is allowed for statistical purposes. 23. Ground No.3 raised by the assessee relates to time limit of assessment u/s 153 of the Act. The learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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