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TMI Blog2024 (5) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... unsustainable. Scope of amendment - The amendment brought in Rule 11UA of the Act was introduced to mitigate the hardship faced by taxpayers by the un-intended invocation of Section 56(2)(vlib) read with rule 11UA and therefore the same is a curative amendment. Thus where an amendment which is inserted to remedy unintended consequences and to make the proviso workable, an amendment which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. Hence, in view of above mentioned submissions and judicial pronouncements curative amendment in Rule 11UA of the Income Tax Rules, 1962 introduced by CBDT notification 81/2023 dated 25.08.2023 will apply retrospectively and consequently, the addition of Rs. 50,77,334 u/s 56(2)(viib) read with rule 11UA is unsustainable as the difference between issue price and value adopted by AO is 2.1% i.e. less than 10%. Appeal of the assessee is allowed. - Sh. C. N. Prasad, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits. 5. Brief facts of the case are that the assessee received an amount of Rs. 23,80,00,050/- on account of issue of 1,58,66,670 equity shares issued at the rate of 15/- (including premium of Rs. 5/-) on 16.03.2015. The assessee company has allotted the shares to the following parties: M/s Jenson Durgs Pvt. Ltd. - 1,26,66,670 shares M/s Sakshi Pharmaceuticals Pvt. Ltd. - 12,00,000 shares M/s Sakshi Developers Pvt. Ltd. - 20,00,000 shares 6. The assessee filed the copy of valuation certificate issued by Chartered Accountant to explain the calculation done under Rule 11UA of the Income Tax Rules. The assessee submitted that as per valuation certificate issued by Chartered Accountant in accordance to Rule 11UA of the rules, value has been arrived at Rs. 14.77 per share and suggested value was Rs. 15 per share. Accordingly, assessee allotted above shares at value of Rs. 15 per share (inclusive of premium of Rs. 5/share). 7. Contrarily, the Assessing Officer computed the fair market value of the share at Rs. 14.68 per share and made the addition of Rs. 50,77,334/- u/s 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue price shall be deemed to be the fair market value of such shares; (ii) sub-clause (a) or sub-clause (b) or sub-clause (d) of clause (A), for consideration received I from a non- resident, by an amount not exceeding ten per cent, of the valuation price, the issue price shall be deemed to be the fair market value of such shares. 13. From perusal of above notification, it is evident that where the difference between the issue price and value adopted by the AO is 10% or less, in such cases issue price will be deemed to be the fair value of shares for the purpose of Rule 11UA of the Income Tax Rules, 1962. In the present case the issue price is Rs. 15 per share and the value adopted by the AO is Rs. 14.68/per share, hence the difference between the issue price and value adopted by AO is Rs. 0.32 i.e. 2.21% (0.32/15) which is less the then the safe harbor of 10% variation in value introduced by CBDT notification 81/2023 dated 25.08.2023. 14. Hence, in view of above mentioned submission and curative amendment introduced by CBDT notification 81/2023 dated 25.08.2023, addition of Rs. 50,77,334/- u/s 56(2)(viib) read with Rule 11UA is unsustainable. 15. With regard to the applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first proviso to section 43B will be available only prospectively does not appear to be correct. As observed by G. P. Singh in his Principles of Statutory Interpretation, 4th Edn., page 291, It is well settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended. In fact the amendment would not serve its object in such a situation, unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained. 16. Further, reliance in this regards is placed upon the ITAT Mumbai judgment in the case of Shaista Irphan Mogul Vs. ACIT, CC-5 (3) , Mumbai, 2021 (8) TMI 270 - ITAT Mumbai, Dated July 1, 2021: 9. Upon careful consideration we note that the difference between value declared and value as per stamp value authority is less than 10%. This is within the tolerance limit specified in section 50C. The authorities below have rejected it on the premise that the tolerance limit was introduced by the Finance Act, 2018; hence it is not applicable for the year under consideration. We note the plea that the amendment was intended to cure a hardship and hence retrospective has been duly acce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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