TaxTMI 
TaxTMI 
2018 (10) TMI 1293
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....er dated 31 March 2016 passed under section 143(3) of the Act is erroneous in so far as it is prejudicial to the interests of the revenue. Direction to the Assessing Officer to make enquiry and verification in respect of valuation of premium on the shares issued by the appellant: 3} On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax erred in directing the Assessing Officer to make enquiry and verification in respect of the valuation of premium on the shares issued by the appellant. 4) On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax erred in not appreciating that once the provisions of section 56(2)(viib) of the Act have been held as not applicable in the order dated 19 March 2018, there is no requirement of making any enquiry or verification in respect of the valuation of premium on issue of shares. Each of the above grounds of appeal are without prejudice to one another. The appellant hereby reserves the right to add to, alter or amplify the above grounds of appeal. I, A.M. Kulkarni, Director, Mukand Sumi Meta! Processing Limited, the appella....
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....ceptable considering the fact that the company is incorporated only on 1/8/2012. It is not probable that within 10 days of creation of the company,, without any business activity or assets, this valuation could he made. Further, the assessee company could not have provided the Balance sheet's required for preparation of the valuation report on 10/8/2012. The basis and presumptions for Balance Sheet/s and the assumptions and presumptions for values adopted for DCFarc neither stated nor explained. Bank A/cs copies have also not been furnished. Further, it is found that assets were transferred to the assessee company on 25/1/2013 which is after 5 months of submission of the valuation report. From the above, it is clear that the assessee company had no assets on the valuation date and no business activity was being carried out till the date of valuation. Therefore, it is clear that the valuation report by the valuer M/s SSPA & CO. CA is not based on dependable facts and evidences and prima facie not acceptable. This improbable high valuation also seems a camouflage and colourable device adopted to introduce monies/cash into the company. 2.3. Such shares at premium hove als....
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....uired into or verified by the Assessing Officer. Accordingly the order is passed by AO without making inquires or verification which should have been made. Additionally, in view of provision of Sec 56(2)(viib). there is an under assessment in this case of Rs. 1,78,92,00.000/- (Rs.90/- * 1,99,30,000 (no of shares Issued to Mukund Ltd & others))." 4. In response, the assessee submitted that provisions of section 56(2)(viib) were not applicable to the assessee as the company was to be treated as a company in which public it was substantially interested. Further the point was response was submitting that the issues raised by the learned CIT- have already been dealt with by the assessing officer. The reply in detail as re-produced in the learned CIT-'s order is as under: 3.1 In the aforesaid notice, it has been mentioned that the premium received bit Mukand Sumi for issue of shares, ought to be taxed under section 56(2)(viib) of the Act. 3.2 In this regard, attention is invited to section 56(2)(viib), which reads as under: ''where a company, not being a company in which the public are substantially interested, receives, in any previous year, ....
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....ideration. In this regard, Mukand Sumi has filed an appeal against the assessment order which is pending for disposal with the Commissioner (Appeals). 2.1 "It is also seen that the company has allotted 1,99,30,000 fully paid equity shares (a. R's.10 each at a premium of Rs, 90 per share." In this regard, it is submitted that out of the 1,99,30,000 shares issued during the year, 40.000 shares issued on 28 September 2012 have been issued at face value. 2.2 "'On the perusal of the valuation report submitted by the Assessee dated 10/8/2012, it is seen that the valuer M/s. SSPA & Co,. Chartered Accountants, had followed the DCF method to work out the equity value at Rs. 2497 million. The said valuation is not justifiable or acceptable considering the fact that The company is incorporated only on 1.8.2012. It is not probable that within 10 days of creation of company, without any : business activity or assets, I this valuation could be made. Further. the assessee company could not have provide the Balance sheets ; required for preparation of the. valuation report on 10.8.2012. The basis and presumptions -for Balance Sheet and the assumptions and presumptions for va....
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....es. Note/submission in this regard was filed by Mukand Sumi vide letter dated 15 March 2016. Thus, the relevant details have been filed by Mukand Sumi and the same have been verified by the Assessing Officer during the course the assessment proceedings. 5. Considering the above, the learned CIT agreed that provisions of section 56(2)(viib) cannot be applied on the facts of the present case as the assessee falls under the definition of companies in which public are substantially interested as per section 2(18) of the I. T. Act. Despite observing so, the learned CIT- proceeded to remark that the assessing officer has not carried out any examination of the valuation made and he has not made specific enquiries on the issue of valuation. The learned CIT- held as under: 5. The assessee's submissions have been considered. From the facts of the case and from the replies submitted alongwith the requisite documents, it is clear that the provisions of sec 56(2)(viib) cannot be applied as Assessee falls under sec 2(10) of the I. T. Act, 1961. 5.1 However in so far as valuation of premium on shares is concerned, records indicate that the AO has not carried out any valua....