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TMI Blog2025 (4) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 1,48,267 treating it as income from other sources as per provisions of section 56(2)(viib) of the IT Act, 1961. 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 Rules 1962, the Ld. CIT(A) has erred in confirming the addition as the difference between fair value adopted by the AO and issue price is only 0.88% i.e. less than 10%. 4. On the facts and circumstances of the case, the learned CIT(A) has erred in both on facts and in law in upholding the assessment which was made without giving adequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions of the assessee: "During the course of appellate proceedings, it was contested by the appellant that the share premium has been computed in accordance with valuation under Rule 11 UA. It was also contested that the variation from the valuation report is within the range of 10%. In this regard, reliance was also placed on the CBDT notification 81/2023 dated 25.9.2023." 3.1 However, Ld. CIT(A) was not convinced with the aforesaid submissions of the assessee, hence, he confirmed the AO's order by observing as under:- "I have perused the facts of the case and the submissions on record. It is seen that there was a clear difference between the issue price of the share and the price valued under Rule 11UA. Under these circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sub-clause (d) of clause (A), for consideration received from a non-resident, by an amount not exceeding ten per cent of the valuation price, the issue price shall be deemed to be the fair market value of such shares. Therefore, as per the notification, the difference is (0.88%) which is less than 10% in the present case. Now, with regard to applicability of this notification, the assessee company is placing the reliance on judgment of Sakshi fincap Pvt. Ltd. vs. ITO dated 16.4.2024 passed by the ITAT, Delhi wherein, it was held in para 15 that amendment by the CBDT is curative and will apply retrospectively." 5.1 Per contra, Ld. DR relied upon the order of the AO. 6. We have carefully considered the submissions and perused the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is 10% or less, in such cases issue price will be deemed to be the fair value of shares for the purpose of Rule 11UA of the Income Tax Rules, 1962. In the present case the issue price is Rs. 15 per share and the value adopted by the AO is Rs. 14.68/per share, hence the difference between the issue price and value adopted by AO is Rs. 0.32 i.e. 2.21% (0.32/15) which is less the then the safe harbor of 10% variation in value introduced by CBDT notification 81/2023 dated 25.08.2023. 14. Hence, in view of above mentioned submission and curative amendment introduced by CBDT notification 81/2023 dated 25.08.2023, addition of Rs. 50,77,334/- u/s 56(2)(viib) read with Rule 11UA is unsustainable. 15. With regard to the applicability of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT vs. Sri Jagannath Steel Corporation [1991] 191 ITR 676, has taken a similar view holding that the statutory liability for sales tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under section 43B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High Court in the above case held the amendment to be curative and explanatory and hence retrospective. The Patna High Court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70. It has held the amendment inserting first proviso to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the provisions duly support this premise. Moreover, in such situation curative provision to remove hardship should be retrospective is duly supported by Hon'ble Supreme Court decision in the case of Allied Moters (P) Ltd. (91 Taxman 205) by the following exposition. "A proviso which is inserted to remedy unintended consequences and to make the proviso workable, a proviso which supplies an obvious omission in the section and is require 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." Undoubtedly this amendment was done to obviate hardships arising out of minor variation in v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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