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The ITAT held that the initial unsigned assessment order issued in the name of the non-existent company was invalid, affirming the validity of the successor company's signed order. The tribunal ruled that the provisions of section 56(2)(viia) do not apply to buyback of a company's own shares, as such shares do not "become property" of the recipient nor are they "shares of any other company," thus negating the addition made on this ground. Regarding interest income on income-tax refunds and long-term non-trade investments, the tribunal found that the AO erred in treating it as business income, breaching the principle of consistency since the income was previously declared under "income from other sources." Lastly, the claim for deduction under section 35AC was restored for fresh adjudication with directions to the AO to examine evidence and provide a fair hearing to the assessee.
The ITAT held that the initial unsigned assessment order issued in the name of the non-existent company was invalid, affirming the validity of the successor company's signed order. The tribunal ruled that the provisions of section 56(2)(viia) do not apply to buyback of a company's own shares, as such shares do not "become property" of the recipient nor are they "shares of any other company," thus negating the addition made on this ground. Regarding interest income on income-tax refunds and long-term non-trade investments, the tribunal found that the AO erred in treating it as business income, breaching the principle of consistency since the income was previously declared under "income from other sources." Lastly, the claim for deduction under section 35AC was restored for fresh adjudication with directions to the AO to examine evidence and provide a fair hearing to the assessee.
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