TaxTMI 
TaxTMI 
2018 (9) TMI 2020
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.... Trading Co. Pvt. Ltd. at fair market value which was more than the book value as per r.w.Rule 11UA was seen by the Dy. C.I.T - Circle 8(2)(1), Mumbai, in her order u/sec 143(3) dated 26.2.2016. 1.2 The said Ld. PCIT erred in not considering the fact that the said A.O. completed the assessment u/sec 143(3) after proper inquiries and verification of relevant documents to her satisfaction and in compliance of the provisions of sec. 56 (2)(viia) r.w. Rule 11UA (1) (c) (b) and therefore the said order was not erroneous and prejudicial to the interest of the revenue. 1.3 Without prejudice to above, the said Ld. PCIT erred in not considering the fact that the appellant had never acquired unquoted shares of M/s Omega Properties Pvt.Ltd. and M/s Dakshina Properties Pvt.Ltd. and therefore, examination on valuation of the said two companies U/Rule 11 UA(1)(c)(b) by the said A.O. was not required, 1.4 The said Ld. PCIT erred in not considering the fact that the appellant had acquired the unquoted equity shares of M/s Suprasad at a fair market value of Rs. 7,262/- per share based on the valuation report of a professional firm whereas the value of the same determined ....
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.... (a) Shares of M/s Geetanjali Trading Co. Pvt. Ltd. were not purchased at all. It is in fact a 100% holding company of the assessee. (b) The FMV of Asian Paints share was considered while valuing the subsidiary company share and considered in the value of share of Suprasad Investment & Trading Co. Pvt. Ltd. (c) FMV is applicable only from 01.04.2018 in Rule 11UA and not earlier. Stating the above facts, the assessee submitted before the PCIT that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of revenue and therefore, following the decision in Malabar Industries Co. Ltd., action u/s 263 is not warranted in this case. 3.2 However, the PCIT was not convinced with the above explanation of the assessee and referring to (i) computation of FMV as per the assessee, (ii) FMV as on 31.03.2012 of Omega Properties Pvt. Ltd. and Dakshina Properties Pvt. Ltd. and (iii) computation of FMV of shares as done by the DCIT-4(1)(1), Mumbai, found that there was considerable variation in valuation of shares as done by the AO as per the proposal and as submitted by the assessee in the course of proceedings before him. The assessme....
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.... the impugned assessment year and therefore, the question of furnishing details of the said shares does not arise. The assessee had received 52,86,062 equity shares of Asian Paints Ltd. from its holding company viz. Geetanjali Trading & Investment Pvt. Ltd. Since the said holding company holds 100% shares of the assessee, the said transfer is exempt u/s 47(iv) of the Act. Further, section 56(2)(viia) does not apply to shares of a quoted company (Asian Paints Ltd.) received by the assessee. Therefore, it is stated that the question of valuation of these shares at market value does not arise. Further, the Ld. counsel submits that the assessee had submitted computation of value of share under Rule 11UA of M/s Suprasad Investment & Trading Co. Pvt. Ltd. along with the balance sheet as on 31.03.2012 vide letter dated 28.01.2016. The value of shares of M/s Suprasad Investment & Trading Co. Pvt. Ltd. as worked out under Rule 11UA is Rs. 1,490/- per share and the assessee had purchased these shares at Rs. 7,262/- per share. The Ld. counsel also submits that Rule 11UA as in force in the impugned assessment year does not provide and require to replace FMV of quoted shares to book value....
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..... DR further submits that the assessment order dated 26.02.2016 passed by the AO does not reveal that a detailed examination of acquisition of assets and applicability of section 56(viia) and Rule 11UA was done at all in acquisition of shares of Suprasad Investments & Trading Co. Pvt. Ltd. Further, the valuation of shares of M/s Suprasad Investments & Trading Co. Pvt. Ltd. necessitates the valuation of shares of Omega Properties Pvt. Ltd. and Dakshina Properties Pvt. Ltd. and these were not done by the AO. Thus the Ld. DR supports the order passed by the PCIT. 6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We find that the assessee had not acquired any shares in Geetanjali Trading & Investment Pvt. Ltd. during the impugned assessment year and therefore, the question of furnishing details of the said shares does not arise. It is stated in Note No. 8(3) of the Balance Sheet that "during the period following investments of Asian Paints Ltd. have been transferred from the holding company at cost". The assessee had received 52,86,062 equity shares of Asian Paints Ltd. from its holding company i....
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....) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PE = total amount of paid up equity share capital as shown in the balance-sheet; PV= the paid up value of such equity shares;" 6.1 A similar issue arose in M/s Minda SM Technocast Pvt. Ltd. (supra). The AY is 2014-15. The facts are that the assessee had acquired shares of M/s Tuff Engineering Pvt. Ltd. (in short 'TEPL') at Rs. 5 per share. The shares were acquired by the assessee from three companies. The assessee claimed to have valued the shares of TEPL as per the provisions of Rule 11UA and filed a copy of the report prepared by the Chartered Accountants in support of its claim to justify the price of shares at which these were required. However, the AO was of the view that the assets declared by TEPL in its balance sheet should have been valued as per the circle rate while determining the value of shares acquired by the assessee. Accordingly, the AO determined the value of shares at Rs. 45.72 per share of TEPL and....