9911796707
TMI Blog2024 (7) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 31/03/2014, the appellant company had allotted 3,47,980 shares. Out of these shares, 3,12,980 shares of face value ₹ 100, each were issued at par to the promoters and the remaining 35,000 shares of ₹ 100, each were issued at a premium of ₹ 450, (shares were @ ₹ 550 per share) to three investors in lieu of 10% share in the company. The valuation report was obtained much before the date of allotment. We are unable to reconcile the fact as to why the no premium was taken from the promoters of the company when shares were issued within some financial year. Adoption of the FMV as Determined under Rule 11UA - We have numerous decisions of the Co ordinate Bench of the Tribunal, where the valuation in accordance with rule 11UA, has been remanded back to the Assessing Officer for fresh determination. But since in this case, valuation as per rule 11UA has not been adopted, we do not consider it fit to remand the matter for re determination. The facts clearly highlighted that the Registered Valuer s report was made to suit the interest of company and is not based on any corroborative evidence. Accordingly, we deem it fit and proper to hold that no cognizance shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied with the DCF valuation report furnished by the assessee. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the company was incurring heavy losses and had allotted shares at par during the same year to the promoters but shares were allotted to private investors at a premium of Rs. 450 which is 4.5 times the face value. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the company cannot engage any valuer to make available a report valuing the assets far beyond its real value for commercial purposes which would aid in tax avoidance. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the company had not restated the value of the assets in the balance sheet for the year ending 31.03.2014 or even later. 8. Any other question of law and fact to be raised at the time of appeal. 9. It is humbly prayed to set aside the order of the CIT(A) and restore the order of the assessing officer. 3. Facts in Brief: The assessee is a private limited company engaged in the business of manufacturing of autoclaved aerated concrete bricks. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial land in the MIDC area of Nagpur. The impugned land was allotted in the year 2009 and it is recorded in the books of accounts of the assessee at a historical price of ₹ 90,80,400, and since then, the market value of the underlying asset has increased substantially. The assessee also submitted a report of approved Registered Valuer, dated 04/10/2012, who has estimated value of land at ₹ 5,64,00,000, as on 01/10/2021. The impugned shares were allotted in 2013 on the basis of this valuation. The learned CIT(A) was further of the considered view that the Assessing Officer erred in rejecting the valuation methodology opted by the assessee. On perusing the Valuation Certificate given by the appellant, the learned CIT(A) noticed that it is apparent that the assessee has computed the fair market value of the share on the basis of Net Asset value method, albeit he has simply altered the historic cost of the industrial land with that of the Valuation estimated by the Registered Valuer as in 2012, which was used for the valuation of shares in 2013. Therefore, the learned CIT(A) was of the view that the assessee has correctly adopted the fair market value of the asset, and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Land (As Certified by Registered Valuer) 56400000/ Cash in Hand 28507/ Deposits 8779/ Bank Balances 47206/ Total (A) 56484492/ Liabilities Unsecured Loans 8950000/ Provisions 3000/ Total (B) 8953000/ Net (A Ba) 47531492/ Issued Capital in Nos. 2020 Face Value Per Share 100/ Fair Value Per Share 23530/ The said certificate is issued at the request of Management of company for the purpose of determining the fair value of share of company. For Tarun Sawal Chartered Accountant 05/10/2012 Nagpur Sd/ Proprietor M.no.107357 8. It is difficult to comprehend as to how valuation can be done on 01/04/2012, when the date of valuation is on 01/10/2012, by registered valuer. We also deem it expedient to reproduce the report of the Government Registered Valuer which is placed at assessee s Paper Book at Page 23 to 28, to have a clear understanding of the issue. It appears that the Valuer has adopted a rate of valuation of 2,000 per sq.mtrs. as per the market rate. However, there is not absolutely any piece of evidence to substantiate the adoption of such value. Page 26 of the Paper Book is reproduced below: The said property even though situated in Bunoori Industrial Area (MIDC), due to lack of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (8) and sub-section (9) of section 270A for the said previous year.] (a) the fair market value of the shares shall be the value- (1) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; 10. It is a prime requirement that the fair market value of the shares shall be the value as on the date of issue of shares. This has not been done here because valuation report is antedated on 01/04/2012. The learned A.R. did not have any satisfactory reply to these factual infirmities being glaringly manifest. He finally pleaded that the matter may be set aside to the DVO for fresh valuation. Unlike section 50C and 56(2)(x) of the Act, there is no reference in this sub clause to get the valuation done by the DVO. Further, he also could not throw any light about how the valuation done by the registered valuer can be corroborated a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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