TaxTMI 
TaxTMI 
2019 (3) TMI 272
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....ation of excess share premium received as income from other sources under section 56(2)(viib) of the Income-tax Act, 1961 ['the Act'] 1.1. Appellant's choice of method of valuation as per law a) The learned Commissioner of Income-tax (Appeals) ['CIT(A)'] erred in upholding the order of the Assessing Officer ['AO'] and confirming his action of bringing the share premium to tax under section 56(2)(viib) of the Act. b) The learned CIT(A) failed to appreciate that: * Rule 11UA(2) of the Income-tax Rules, 1962 ['Rules'] has explicitly conferred an option upon the tax payer to adopt any of the methods either Net Asset Value ['NAV'] method under Rule 11UA(2)(a) of the Rules or Discounted Cash....
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....wing such forecasts and these could not have been compared with the actuals to expect the same figures as were anticipated in the past. c) The learned CIT(A) failed to appreciate that: * The Appellant was incorporated in 2009 and had initially introduced 2 line of business activities in the health care sector; given the competitive market conditions, it decided to drop one of its business lines; * The projections were drawn based on future expectations w.r.t both the business lines and comparison with actual numbers, when one of the business line was dropped off is incorrect and unreasonable. 1.4. AO/ CIT(A) to have sound reasoning before rejecting the Appellant's method of valuation and introducing his own a) The learned....
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....res and not preference shares; b) Preference shares are 'quasi-debt' instruments, they stand on a different footing from equity shares and hence, the tests applied to equity shares could not be arbitrarily applied to preference shares. The Appellant craves leave to add, alter, rescind and modify the grounds herein above or produce further documents, facts and evidence before or at the time of hearing of this appeal. For the above and any other grounds, which may be raised at the time of hearing, it is prayed that necessary relief may be provided." 3. Brief facts are that the AO has noted on page 2 of the assessment order that the assessee company has allotted 36,000 Compulsory Cumulative Convertible Preference Shares (CCCP....
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.... a price it would fetch if sold in open market. He further submitted that copy of written submissions filed by the assessee before CIT (A) is available on pages 103 to 112 of the paper book and in particular, our attention was drawn to page 108 of the paper book and it was pointed out that it was submitted by the assessee before CIT (A) that sub clause (c) of Rule 11UA (1) (c) is applicable in the present case but in spite of this, there is no decision of CIT (A) on this aspect as per the impugned order and therefore, the matter may be restored to his file for a fresh decision after deciding this aspect. Learned DR of the revenue supported the order of CIT (A). 5. We have considered rival submissions and gone through the material available....
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....hich Rule/Sub Rule/ sub clause is applicable in the facts of the present case and thereafter, the matter should be decided as per the applicable Rule/Sub Rule/ sub clause. All the terms of the issue of preference shares have to be looked into for this purpose to find out whether the present receipt of share premium is for issue of preference shares or for issue of equity shares because even if it is found that because of limited voting right only, the said shares are not equal to equity shares, then also, this is important to note that ultimately, these preference shares are to be converted into equity shares after a fixed time at a fixed rate and hence, this is important to find out as to whether the premium received is for equity shares t....