TaxTMI 
TaxTMI 
2021 (4) TMI 436
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....t. 24/11/2015 passed under section 143(3) of the Income Tax Act, 1961 [for short 'the Act']by exercising jurisdiction u/s 263 of the Act. 2. Brief facts of the case are that the assessee company filed its return of income for the assessment year under consideration declaring loss of Rs. 30,759/-. The case was selected for scrutiny and the A.O. passed assessment order under section 143(3) of the Act making addition of Rs. 30,446/- under section 14A of the Act. Subsequently, the Ld. PCIT noticed that the assessee had received share application money amounting to Rs. 11,27,00,000/- for 22,54,000 shares during the FYs 2006-07 to 2013-14 having face value of Rs. 10 and premium of Rs. 40/- per share. Out of the said amount, Rs. 3,10,00,000/- w....
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....A O . being erroneous as well as prejudicial to the interest of the Revenue. 3. On the facts and circumstances of the case, the learned PCIT(C) has erred both on facts and in law in ignoring the fact that all the issues raised by him in notice under Section 263 were before the A.O. and as such the jurisdiction on this issue under Section 263 cannot be assumed, 4, On the facts and circumstances of the case, the learned PCIT(C) has erred both on facts and in law in rejecting the contention of the appellant that the issue of receipt of share application money during the year was before the AO in proceedings under Section 143(3) and was allowed after application of mind by him as such the same cannot be the matter for reassess....
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....ed by the AO neither erroneous nor prejudicial to the interest of the Revenue. Ld. Counsel further pointed out that the issue raised by the Ld. PCIT in this case has already been decided in favour of the assessee by the Chandigarh Bench of the ITAT rendered in the case of ITO Vs. M/s Fred Enterprises Pvt. Ltd. ITA No. 1379/Chd/2018, wherein the Tribunal has held that the provisions of Section 56(2) (viib) are triggered in the year in which the shares are issued. Since the observations of the Ld. PCIT are contrary to the decision of the ITAT Chandigarh Bench in the aforesaid case, the impugned order is liable to be quashed. 6. On the other hand, the Ld. DR fairly admitted that the issue raised by the Ld. PCIT in this case is covered in fa....
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....ideration and since the in the present case no consideration was received in the impugned year the addition is not sustainable. The Revenue challenged the findings of the Ld. CIT before the ITAT. The coordinate Bench vide order dt. 30/06/2020 set aside the findings of the Ld. CIT(A) holding as under: 11. On interpreting the term consideration received as being at the time of issue of share s as held by us above, the valuation date for determining FMV is the date of issue of shares. Thus, a comparison of the fair market value of shares and the consideration received, both relating to the issue of shares is made and the surplus if any is subjected to tax. This is a reasonably sound and logical interpretation since the sect ion, subje....
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....d in that year and accordingly it was held that the provisions of sect ion 56(2) (viib) were invoked in that year and not in the year of allotment of share s. In the case before us the terms and conditions of issue of shares were not set t led in the year of application for shares but on the contrary in the year of allotment since while the application had been made at a premium of Rs. 90/- the shares were al lot ted in the impugned year at a premium of Rs. 590/- . The said decision therefore is of no assistance to the assessee. The decision of the ITAT Chandigarh Bench in the case of Luxmi Foodgrains(supra) is also distinguishable on facts since in that case the dispute about the invocation of section 56(2) (viib) arose on account....