9911796707
TMI Blog2025 (4) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... e Educomp Professional Education Ltd. (EPEL) is a closely held limited company and the return of income was e-filed on 20.09.21016 declaring loss of Rs. 2,62,763/-. The case of the assessee was reopened u/s 147 for the reason that assessee company has issued 1150772 equity shares valued at Rs. 26,99,82,619/- to M/s Educom Solutions Limited (ESL) having a face value of Rs. 10 each at a premium of Rs. 224.61 per share during financial year 2015-16. The AO observed that assessee declared losses and its future prospects are not promising however, it has charged huge premium on the shares issued. Therefore, the AO raised serious doubts about the valuation report submitted by the assessee obtained to determine the fair market value of shares befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation report with respect to the working of Earning per share nor any justification for quantum of premium was filed, had made the additions of Rs. 7,27,86,329/- to the loss declared by the assessee and finally assessed the income of the assessee at Rs. 7,25,23,566/-. Against this order, assessee preferred an appeal before ld. CIT (A) where despite of various opportunities, no reply was furnished by the assessee. However, ld. CIT(A) based on the statement of facts and other information available on record, was of the view that assessee (EPEL) is a subsidiary of a public limited company (ESL) and in view of section 2(18)(b)(B)(c), the provisions of section 56(2)(viib) are not applicable and deleted the additions made by AO. Against such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made for determining the fair market value of the shares under DCF method. Ld. DR further submitted that the ld. CIT (A) has failed to appreciate these facts and deleted the additions without there being any submissions on the part of the assessee and merely on the basis of statement of facts filed and, therefore, he requested for the restoration of the additions made by the AO. 4. Per contra, the ld. AR vehemently supported the order of the ld. CIT(A) and submitted that the assessing officer has on its own change the method of determination of Fair market value of the shares from DCF method to NAV method. He further submitted that the assessee has followed the due procedure as prescribed in section 56(2)(viib) of the Act according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drew over attention to the copy of the Balance Sheet of the assessee company available in paper book, wherein at notes no. 2, shareholding pattern is appearing according to which 100% shares of the assessee company are subscribed by M/s ESL. He, therefore, prayed that the assessee company is 100% subsidiary of M/s ESL which is a public limited company listed on BSE and NSE and, therefore, the provisions of sections 56(2)(viib) are not applicable in its case. The ld. CIT(A) after duly considering these provisions has deleted the additions and he prayed for the confirmation of the order of ld. CIT(A). 6. We have heard the rival submissions and perused the material available on record. Before dwelling upon the issue, we first consider the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filled, namely :- (A) shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) were, as on the last day of the relevant previous year, listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and any rules made thereunder ; (B) shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than fifty per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and were throughout the relevant previous year beneficially held by- (a) the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L is also a company in which public are substantially interested within the meaning of Section 2(18)(b)(B)(c) of the Act. Accordingly, the provisions of Section 56(2)(viib) of the Act which are applicable to the unquoted equity shares of a company in which public is not substantially interested are not applicable to the case of EPEL where the shares are issued at premium. 10. The co-ordinate bench of Hyderabad Tribunal in case of Appollo Sugar Clinic Ltd Vs. DCIT reported in [2019] 105 Taxmann.com 254 (Hyd, ITAT) dealt with the same issue wherein the Hon'ble Bench has held as under: "11. Considered the rival submissions and material on record. We noticed that assessee -company is step-down subsidiary of Apollo Hospitals Enterprises Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
