Section 56(2)(viib) claim on public company status restored for fresh adjudication after factual reconsideration.

Section 56(2)(viib) was examined in light of the assessee's claim that it was a public limited company in which the public was substantially interested. Because that contention was not specifically dealt with in the assessment order and was not expressly rejected by the first appellate authority, the matter required reconsideration on the relevant facts. The assessee was to be given an effective opportunity to substantiate its claim, and the issue was restored to the Assessing Officer for fresh adjudication rather than finally sustaining the addition.

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Issues: Whether the addition made under section 56(2)(viib) of the Income-tax Act, 1961 required fresh adjudication in light of the assessee's claim that it was a public limited company in which the public was substantially interested.

Analysis: The assessee raised a legal plea before the appellate stage asserting that it fell outside the mischief of section 56(2)(viib) because of its corporate character. The assessment order did not specifically deal with that contention, and the lower appellate order also did not reject it in express terms. In these circumstances, the matter required reconsideration by the Assessing Officer on the relevant facts and after giving the assessee effective opportunities to substantiate its claim.

Conclusion: The issue was restored to the Assessing Officer for fresh adjudication, and the addition was not finally sustained.

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