9911796707
TMI Blog2025 (3) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... to interfere with the order passed by the Ld. CIT(A) and accordingly, the order passed by the Ld. CIT(A) not sustainable in eyes of law and addition in question deserves to be deleted. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 introduced a safe harbour of 10% variation in value by in rule 11UA of the Income Tax Rules, 1962 and so addition u/s 56(2)(viib) of the Act is unsustainable in law as the difference between issue price and value adopted by the AO is 2.1 i.e less than 10%. 3.1 The assessee has also raised an additional ground, which is reads as under: ""3" On the facts and circumstances of the case and in view of CBDT notification 81/2023 dated 25.09.2023 introducing safe harbor of 10% by curative amendment in Rule 11UA of the Income tax Rule s 1962, addition u/s 56(2)(viib) is unsustainable in law as the difference between fair value adopted by the AO and issue price is only 3% i.e. Less than 10%." 4. The Ld. AR further submitted that the 50% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity share allotted to Mr. Hiten Suri and Mr. Sudhir Suri @ Rs. 0.09, differential amount received in respect of shares issued to resident shareholders. Perusal of the above orders, it is manifested that the both lower authorities were of the view that in this case provision of section 56(2)(viib) perfectly attracted and in this regard the Ld. AR submitted that shares were allotted to the existing shareholders in their existing share holding ratio and the shareholding allotment of the aforesaid shareholders remained the same and for this purpose, he draws our attention at page 14 of the paper book, audited financial statements which is placed at page no. 14 of the Paper Book, which is reproduced as under: Details of shares held by each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vayu (Projects-I) Pvt. Ltd. reported in (2023) 151 taxmann.com 47 (Del-Trib.). The relevant operative paragraph of the order of the Tribunal is hereunder: "11.1 As per case records, it is an undisputed fact that the shares have been allotted at a premium to its 100% holding company. Thus, applicability of Section on 56(2)(viib) has to be seen in this perspective. The Co-ordinate Bench of Tribunal in DCIT vs. Ozone India Ltd. in ITA No.2081/Ahd/2018 order dated 13.04.2021 in the context of Section 56(2)(viib) has analyzed the deeming provisions of Section 56(2)(viib) of the Act threadbare and inter alia observed that the deeming clause requires to be given a schematic interpretation. The transaction of allotment of shares at a premium in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the condition for applicability of Section 263 for inquiry into the transactions between to interwoven holding and subsidiary company is of no consequence. We also affirmatively note the decision of SMC Bench in the case of KBC India Pvt. Ltd. vs. ITO in ITA No.9710/Del/2019 order dated 02.11.2022 (SMC) where it was observed that Section 56(2)(viib) could not be applied in the case of transaction between holding company and wholly owned subsidiary in the absence of any benefit occurring to any outsider." 8.2 The Co-ordinate Bench has essentially observed that where the allotment has been made to existing shareholders, the deeming provisions of Section 56(2)(viib) would not ordinarily be applicable. This apart, in the instant case, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
