9911796707
TMI Blog2024 (9) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... produced the Valuation Report before the Ld. PCIT. PCIT neither verified the said Valuation Report produced by the Assessee nor found any fault in the method/manner adopted in the Valuation Report and without giving any reasoning set aside the assessment order. When the Ld. PCIT makes allegation that the Assessee has not produced the Valuation Report before the AO, which has been disputed by the Assessee, nothing prohibited the PCIT from looking into the Valuation Report produced by the Assessee before him and give finding thereupon. Without even examining the Valuation Report and without even finding fault in the method of valuation adopted by the Assessee the PCIT erroneously invoked provision of Section 263 - Appeal filed by the Assessee is allowed. - Sh. Pradip Kumar Kedia, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Assessee : Sh. C. S. Anand, Adv For the Department : Sh. Subhra Jyoti Chakraborty, CIT DR ORDER PER YOGESH KUMAR U.S., JM The present appeal is filed by the assessee for Assessment Year 2014-15 against the order of the Principal Commissioner of Income Tax- 6, New Delhi, dated 30.03.2019 passed u/s 263 of the Income Tax Act, 1961 ( Act fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 960/- for the Assessment Year 2014-15. The case was selected for limited scrutiny through CASS and the reason for the limited scrutiny was Large Share Premium received during the year (verify applicability of Section 56(2) (viib) and the assessment was completed on 18/11/2016 u/s 143(3) of the Act. 4. The Ld. PCIT called for the assessment record, examined and found that the assessment order passed u/s 143 (3) of the Act dated 18/11/2016 was prima facie found to be erroneous and also prejudicial to the interest of revenue, accordingly, issued show cause notice u/s 263 of the Act. After considering the submissions made by the assessee, passed the order u/s 263 of the Act on 30/03/2019 observing that the assessment order passed u/s 143(3) of the Act dated 18/11/2016 is found to be erroneous, therefore, directed the A.O. to compute the income of the assessee by adding Rs. 1,18,93,440/- on account of difference valuation of shares u/s 56(2)(viib) of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee preferred the present Appeal on the Grounds mentioned above. 5. The Ld. Counsel for the assessee vehemently submitted that the order impugned passed by the PCIT dated 30/03/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been discussed. At no point of time, the A.O. complained or demanded for production of valuation report. 10. The Ld. PCIT has show caused the Assessee as to why provision of Section 263 of the Act should not be invoked and the order passed u/s 143(3) of the Act dated 18/11/2016 be set aside on the issue of 56(2)(vii)(b) of the Act. The Assessee submitted the reply vide letter dated 14/03/2019, the relevant gist of the same areas under: It is a matter of record that we had allotted 61945 shares of face value of Rs. 10/-, on premium of Rs. 310/- per share, only to the family members of our directors. It is also a matter of record that we had charged premium of Rs. 310/- per share, on allotment of shares to the family members of our directors. We may clarify here that when we had decided to invite share subscription, we had referred the matter to an independent Chartered Accountant to work out the fair market value at that point of time. The said Chartered Accountant had carried out such exercise, while taking into consideration our balance sheet as on 30.06.2013. Thereafter, the said Chartered Accountant had worked out the fair market value of each share of our company at Rs. 319.63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2013. Thereafter, we had proposed to charge premium of Rs. 310/- per share from the prospective share subscribers. We hereby invite your kind attention towards the explanation (ii) of (a) of sub section viib of section 56 of the Income Tax Act 1961, which reads as under:- Explanation For the purposes of this clause,- (a) the fair market value of the shares shall be the value- (i) 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, licenses, franchises or any other business or commercial rights of similar nature, whichever is higher; You will observe that nowhere in the section 56(2)(viib) and / or Rule 11UA, it is mentioned that the value should be based upon the last audited balance sheet of the company. You are therefore requested to kindly drop the proposal to set aside the issue relating to charging of premium on allotment of shares in terms of section 56(2)(viib) to the AO for examination. 11. It can be seen fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
