TaxTMI 
TaxTMI 
2019 (10) TMI 191
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....of Rs. 5/- per share. Rs. 5/- per share paid as share application money and Rs. 5/- per share paid as premium M/s Motive Equity Pvt. Ltd. 50,00,000 equity shares of Rs. 10 each issued at premium of Rs. 5/- per share. Rs. 5/- per share paid as share application money and Rs. 5/- per share paid as premium M/s Complete Equity Pvt. Ltd. 15,00,000 equity shares of Rs. 10 each issued at premium of Rs. 5/- per share application money and Rs. 5/- per share paid as premium. M/s Glaxo Buildcon Pvt. Ltd. 2,50,000 equity shares of Rs. 10 each issued at premium of Rs. 5/- per share. Rs. 5/- per share paid as share application money and Rs. 5/- per share paid as premium 3. He noticed that the assessee company has received premium on issue of shares to the tune of Rs. 3.5 crores. He, therefore, asked the assessee to justify the premium received over and above the fair market value of the shares, with documentary evidence in terms of section 56(2)(viib) of the IT Act. On the basis of various details filed in the balance sheet, the Assessing Officer determined the paid up value of equity shares of Rs. 10/- each at Rs. 6.65 crores which is as under:- "Total assets - Tot....
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....ng to Rule 11UA of the Rules, the Fair Market value of the equity shares of the company would be as under: Assets = Rs. 47,57,29,528/- Liabilities = Rs. 46,55,69,538/- (i.e. Total Liabilities - Paid up capital - Reserve and Surplus) Here, the AO erred in calculating the value of Liabilities, the AO erred in not including the amount of share application money in Liabilities. As per Rule 11UA, paid up capital and reserve and surplus have to be deducted from the total liabilities. Share application money is not paid up capital, it is a liability till the time the shares are not allotted. PE = Rs. 1,01,00,000 PV = Rs. 10/- per share Fair Market Value = (A-L)/PE*PV = Rs. 10.05 FMV = 47,57,29,526 - (40,83,58,301 + 11,236 + 5,70,00,000) x 10 /1,01,00,000 = Rs. 10.05 Thus, the correct FMV per share, in this case comes to Rs. 10.05/-. 6.9 I have also considered the submission of the appellant with regard to the fact that the company has received permission of change in 'land use' of their land holding, thus having a commercial right for setting up an Institution for Art, Culture and Convention. However,....
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....nsidered as shareholders fund by the assessing officer. Ground No. 4 The Hon'ble CIT Appeals passed the order without considering the FMV of Land owned by the Company as on the date of issuing the shares for calculating the value of shares as per section 56(2)(viib). Ground No. 5 That the assessee craves its plea to add any other ground that may arise during the time of appeal proceeding. PRAYER Under the circumstances submitted above it is respectfully prayed that the appeal may kindly be allowed. Petition under Rule 46 (A) of the Income Tax Rules, 1968-Admittance of additional evidences since, few of the documents could not be filed because of various reasons like lack of clarity of documents of the assessee as well as authorized representative." 7. The ld. counsel for the assessee, referring to page 14 of the paper book, drew the attention of the Bench to the asset side of the balance sheet and submitted that the tangible assets shown in the balance sheet are to the tune of Rs. 56,44,80,642/-. Referring to page 19 of the paper book, he submitted that the land at Gurgaon has been shown at Rs. 56,45,80,642/- as at 31s....
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....ich can be applied in case sub-clause (i) has been exercised. It has been held that FMV can be determined in either of the two manners whichever is higher so as to demonstrate that the value of shares does not exceed the fair market value and then the Assessing Officer cannot insist upon to follow only one particular method. He also relied on the decision of the Jaipur Bench of the Tribunal in the case of Sahu Minerals and Properties Ltd. in ITA No.895/JP/2017, order dated 07.01.2019. 9. The ld. DR, on the other hand, heavily relied on the orders of the Assessing Officer and CIT(A). 10. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee, in the instant case, has allotted 70 lac equity shares of Rs. 10 each at a premium of Rs. 5 per share and has received premium of Rs. 3.5 crores. We find the Assessing Officer, invoking the provisions of section 56(2)(viib), made addition of Rs. 3,50,00,000/- on the ground that the fair market value of shares comes to Rs. 6.65 per share as per the boo....