TaxTMI 
TaxTMI 
2021 (7) TMI 358
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...., Coimbatore has erred in holding that the sec.56(2)(viib) of the Act is not applicable to the assessee's case in view of para no.4 of the Notification GSR 127 (E) dated 19.02.2019, without considering the scope given vide para no.6 of the abovementioned Notification, wherein it has been clarified that, para. no.4 is not applicable to the shares in respect of which an addition made u/s 56(2)(viib) of the Act has been made in a assessment order made under the Act before the date of issue of Notification. 3. The Ld. CIT(A) has erred in the light of para no.6 of the Notification GSR 127 (E) dated 19.02.2019 as the assessment order making an addition of Rs. 2,72,80,664/- under section 56(2)(viib) was passed on 15.12.2018, whereas the date of issue of Notification is 19.02.2019. Hence, para no.4 of the Notification based on which the Ld. CIT(A) has given relief to the assessee is not applicable to this assessee's case as the assessment order was passed before the date of notification. 4. The learned Commissioner of Income tax (Appeals)-1 Coimbatore has erred in holding that the AO has not given any finding on the satisfaction about the genuineness of the credit which c....
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.... are that the assessee company is start up company engaged in the business of print and digital media filed its return of income for the assessment year 2016- 17 on 28.09.2016 declaring loss of Rs. 2,54,15,860/-. The assessee has obtained certificate of recognition as a startup from Department of Industrial Promotion and Partnership. During the year under consideration, the assessee has issued equity shares at share premium of Rs. 124.67 per share to 13 individuals. The case has been taken for scrutiny and during the course of assessment proceedings, the Assessing Officer called upon the assessee to justify issue of shares at premium of Rs. 124.67 per share. In response, the assessee submitted that it is a startup company and has valued its shares on the basis of discounted cash flow method and such valuation has been determined by the registered valuer at Rs. 125.7 per equity share. The Assessing Officer vide his notice dated 08.11.2018 called upon the assessee to explain as to why excess premium charged on issue of equity shares shall not be brought to tax, as per provisions of section 56(2)(viib) of the Income Tax Act, 1961, as evidences filed by the assessee in support of va....
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....pany is covered by Gazette Notification GSR No. 127(E) dated 19.02.2019 and hence, it is clearly outside the scope of section 56(2)(viib) of the Act in respect of share premium collected on issue of shares .The relevant findings of the learned CIT(A) are as under:- "5.0. On going through the submissions of the appellant and the assessment order, I find that the Assessing Officer has not addressed the issue whether the provisions of section 56(2)(viib) is applicable to the appellant. The AC has proceeded to assess the premium as income on a technical ground that the Valuation has not been done as per the provisions contained in Rule 11UA(2)(b) of the IT Rules 1962. Before we proceed to analyse whether the provisions contained in the Rules are satisfied or not, it is necessary to see whether the section 56(2)(viib) is applicable to the appellant. To analyse the same the following facts are relevant. 1. The appellant has obtained a certificate of Recognition as a 'Start Up' from the DIPP. 2. The aggregate amount of paid up share capital and share premium of start up after issue is less than 25 crores as required under notifications. 3. The ....
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....e of provisions of section 56(2)(viib) of the Act, without considering the fact that as per Gazette Notification GSR No. 127(E) dated 19.02.2019 vide para no.6, if the assessee issues shares at premium before the date of notification i.e 19.2.2019, then para 4 of said Notification is not applicable, hence the assessee is not outside the scope of section 56(2)(viib) of the Act. The learned DR further submitted that assuming for a moment, the assessee is covered by Gazette Notification GSR No. 127(E) dated 19.02.2019, but fact remains that whether it has satisfied conditions prescribed in para 4 of said Notification or not has to be seen. Since the assessee has not bought out evidence before the Assessing Officer at the time of assessment proceedings, matter may be set aside to the file of the Assessing Officer to verify facts with reference to CBDT circular No. 45/2016/F.No.173/103/2016 and Gazette Notification GSR No. 127(E) dated 19.02.2019. 10. The learned A.R for the assessee, on the other hand, strongly supporting the order of learned CIT(A) submitted that the learned CIT(A) has rightly appreciated the facts by considering certificate issued by DIPP to recognize the assessee....
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....ls with cases where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to tax as income of the assessee. The proviso provided to section 56(2(viib) has excluded certain category or class of companies from application on fulfillment of certain conditions. Further, for this purpose notified class of persons has been notified by CBDT vide its circular No.173/147/2018-ITA I dated 06.02.2018, as per which any startup company as recognized by DPIIT, Ministry of Commerce & Industry, Govt. of India is outside the scope of provisions of section 56(2(viib) of the Act. In this case, the assessee has filed necessary evidences to prove that it is a recognized startup from DPIIT. Further, the Gazette Notification No.GSR 127(E) dated 19.02.2019 has exempted startup companies from application of provisions of section 56(2(viib) of the Act, provided said startup companies are satisfied conditions prescribe....