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TMI Blog2023 (9) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... nguished by reducing the paid up capital of the assessee company. Hyderabad Bench of the Tribunal in VITP Private Limited [ 2022 (8) TMI 220 - ITAT HYDERABAD] followed the decision in Vohra Financial Services Pvt. Ltd. (supra) and held that with reference to buying back of own shares by a company which become extinguished by reducing the capital, it is clear that the test of becoming property and also shares of any other company fails thereby rendering the provisions of section 56(2)(viia) of the Act inapplicable to the cases of buy back of own shares. Appeal of the Revenue is dismissed. - DR. BRR KUMAR, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER For the Assessee : Shri Amit Goel, CA Shri Pranav Yadav, Advocate For the Department : Shri T. James Singson, CIT, DR ORDER PER ASTHA CHANDRA, JM The appeal filed by the Revenue is directed against the order dated 30.01.2023 of the Ld. Commissioner of Income Tax (Appeals)-26, New Delhi ( CIT(A) ) pertaining to Assessment Year ( AY ) 2018-19. 2. The Revenue has raised the following grounds of appeal:- 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct on facts and in law in deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, the Ld. Assessing Officer ( AO ) raised the issue of buyback of shares and applicability of provisions of section 56(2)(x) of the Act. The Ld. AO found that during the year the assessee company made buyback of 2862500 equity shares @313.40 per share totalling to Rs. 89,71,07,500/-. The fair market value as per Rule 11UA of the Income Tax Rules, 1962 (the Rules ) was Rs. 370.46 per share. There was thus difference of Rs. 57.06 (Rs. 370.46 Rs. 313.40) per share. The Ld. AO held that the difference of Rs. 16,33,34,250/- (2862500 shares @ Rs. 57.06) is income of the assessee under section 56(2)(x) of the Act as buyback of share results into acquisition of property, namely shares and therefore section 56(2)(x) and Rule 11UA squarely apply to the assessee. Accordingly in his elaborate assessment order passed on 15.07.2019 under section 153A/143(3) of the Act, the Ld. AO determined the total income of the assessee at Rs. 1,26,96,35,850/- including therein an addition of Rs. 16,33,34,250/- under section 56(2)(x) of the Act. 5. Aggrieved, the assessee filed appeal before the Ld. CIT(A) who deleted the impugned addition by observing and recording his findings in para 7.3 of his appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections; (c ) any property, other than immovable property.- (A) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (B) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration: Further the definition of the term 'property' as provided in explanation to section 56(2)(x) is same as in clause (d) of explanation to section 56(2)(vii) which is as under: - d) property means the following capital asset of the assessee, namely:- (i) (immovable property being land or building or both; (ii) shares and securities (iii) jewellery: (iv) archaeological collections; (v) drawings: (vi) paintings: (vii) sculptures; (viii) any work of art, or (ix) bullion; From the perusal of aforesaid provisions, it is evident tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,250/- made by the assessing officer is deleted and accordingly, these grounds of appeal are allowed. 6. Dissatisfied, the Revenue is in appeal before the Tribunal and all the grounds relate thereto. 7. The Ld. CIT-DR supported the order of the Ld. AO and emphasised that the order of the Ld. CIT(A) is not tenable in law and on facts. The Ld. AR on the other hand relied upon the order of the Ld. CIT(A) who followed the decisions rendered by Delhi, Mumbai, Hyderabad and Chennai Tribunals in favour of the assessee. 8. We have considered the submissions of the parties and perused the records. The facts are not in dispute. The only issue for consideration is whether buyback of its own share by a closely held company is hit by the provisions of section 56(2)(x) of the Act. Section 56(2)(x) has been inserted by the Finance Act, 2017 w.e.f. 1.4.2017. It applies to any person who is recipient whereas section 56(2)(vii) inserted by the Finance (No. 2) Act, 2009 w.e.f. 1.10.2009 applies to an individual or HUF who is recipient and section 56(2)(viia) inserted by the Finance Act, 2010, w.e.f. 1.6.2010 applies to a firm or a company not being a company in which the public are substantially int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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