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TMI Blog2024 (6) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision rendered in the case of BLP Vayu (Projects-I) (P.) Ltd. vs. . [ 2023 (6) TMI 209 - ITAT DELHI] wherein it was observed that object of treating excessive premium received on issue of shares as taxable income of revenue character under Section 56(2)(viib), is wholly inapplicable to issuance of shares to existing shareholders where no resultant income could be said to accrue to ultimate beneficiary, i.e., existing shareholders. The action of the AO in such facts cannot be branded as erroneous per se. No prejudice could possibly result to the interest of the revenue by charging purportedly excessive premium on fresh issue of shares to the existing shareholders either. In the absence of order being erroneous and also prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the points set out in paragraph 4.2 of the revisional order. As per paragraph 4.2 of the order passed under Section 263 of the Act, the Pr.CIT has alleged that the AO has passed the assessment order without examining the requirement laid down in Rule 11U / Rule 11UA of the Income Tax Rules, 1962 for the determination of Fair Market Value (FMV) of shares issued by the assessee. The AO has simply accepted the valuation report without applying its mind to all perspective with reference to object of Section 56(2)(viib) of the Act. 3. The relevant facts in brief are that the assessee filed return of income declaring total income at Rs. 80,24,070/-. The return filed by the assessee was subjected to scrutiny assessment under Section 143(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assets and liabilities in the Balance Sheet has to be taken. Further, as per Rule 11U, the Balance Sheet in relation to any company means balance-sheet as drawn up on the valuation date which has been audited by the auditor of the company and where the balance-sheet on the valuation date is not drawn up, the balance-sheet drawn up as on a date immediately preceding the valuation date which has been approved and adopted in the annual general meeting of the shareholders of the company. 2.1 It is seen that in the present case, for the purpose of valuation of shares, the company has not submitted any balance sheet which has been audited by the Auditor. In support of the fair market value of the shares, the assessee company vide letter dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicted above. In case, no response to this show cause notice is received by the said date, it will be construed that you have no objection to the proposed action and order u/s. 263 of the IT Act, 1961 shall be passed. Pr. Commissioner of Income Tax-2, Delhi 5. The assessee filed its counter to the Show Cause Notice which is reproduced in paragraph 3 of the revisional order. On consideration thereof, the Pr.CIT passed the order under Section 263 of the Act whereby the assessment order was set aside with a direction to the AO to make fresh assessment de novo after making suitable inquiries towards determination of Fair Market Value (FMV) of shares issued and consequent taxability under Section 52(2)(viib) of the Act. 6. Aggrieved by the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der is erroneous nor prejudicial to the interest of the revenue on such factual matrix. 9. The ld. DR for the Revenue, on the other hand, referred to and relied upon the revisional order. 10. We have carefully considered the rival submissions and perused the material available on record. 11. From the facts borne out from records, it appears that substantial shares have been allotted to the existing shareholders and only few shares have been allotted to the new subscribers. Shares were allotted at the premium of Rs. 40 per share based on valuation report filed by the independent valuer. 12. In the factual backdrop, we refer to the decision rendered by the Co-ordinate Bench in the case of BLP Vayu (Projects-I) (P.) Ltd. vs. Pr.CIT, (2023) 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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