Share premium of Rs. 90 per share with Rs. 10 face value upheld as genuine under Section 68

Delhi HC upheld deletion of addition under Section 68 regarding share premium of Rs. 90 per share with face value Rs. 10. CIT(A) and ITAT correctly found no due diligence required as loan converters were directors of assessee or group companies. Valuation report showed share value at Rs. 101 per share using DCF method under Rule 11UA, making Rs. 100 total per share (including premium) reasonable and not sham transaction. AO's reliance on Section 56(2) provisions was properly considered despite addition being under Section 68.

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Issues:
- Delay in re-filing the appeal
- Challenge to the order passed by the Income Tax Appellate Tribunal regarding deletion of addition under Section 68 of the Income Tax Act, 1961

Delay in Re-filing the Appeal:
An application was filed seeking condonation of a 435-day delay in re-filing the appeal. The delay was condoned based on the reasons stated in the application.

Challenge to Tribunal's Order:
The appeal pertained to Assessment Year 2013-14 and focused on the deletion of an addition under Section 68 of the Income Tax Act. The key issue before the Tribunal was the sustainability of the deletion of the addition of Rs. 4,08,60,000. The Assessing Officer had added this amount due to alleged failure to explain the issuance of shares at a premium. The respondent had converted loans into share capital, with detailed transactions and utilizations provided.

The Commissioner of Income Tax (Appeals) found that loans and deposits were converted into share capital, except for amounts returned to a specific entity. The AO raised concerns about the valuation of shares and share premium, referencing Rule 11UA and Section 56(2) of the Act. The respondent submitted a valuation report using the Discounted Cash Flow Method, which was accepted as additional evidence by the CIT(A).

The CIT(A) concluded that the transaction was genuine, rejecting the AO's view of a collusive share premium valuation. The Tribunal upheld the deletion of the addition, noting that the amended Rule 11UA would apply to transactions pre and post its enactment. The AO's reference to Section 56(2) and Rule 11UA justified the CIT(A)'s analysis, leading to the dismissal of the appeal.

In conclusion, no substantial question of law arose for consideration, and the appeal was closed with parties instructed to act based on the digitally signed copy of the order.

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